On Thursday, BofA Securities adjusted its outlook on Autohome Inc. (NYSE: ATHM) shares, increasing the price target to $33 from $32 while maintaining a Neutral rating.
The adjustment follows Autohome's first-quarter performance, which saw an acceleration in top-line growth to 5% year-over-year (YoY), surpassing the consensus estimate of 3%. The company's non-GAAP net profit also exceeded expectations, rising 2% YoY to RMB 494 million, compared to the predicted RMB 433 million.
Despite a 9% YoY decline in advertising revenue, which was slightly worse than BofA Securities' estimate of an 8% drop, other segments of Autohome's business showed strong performance. The leads generation segment reported a 7% YoY increase, outperforming forecasts due to a higher mix of premium membership products.
Additionally, online marketplace revenue saw a 13% YoY boost, fueled by a notable 27% growth in dealership data product revenue.
Autohome is actively enhancing its data products by integrating a large language model tailored to the auto industry and incorporating artificial intelligence in various applications such as outbound calls, customer services, and content creation. The revenue from new energy vehicle (NEV) brands experienced a significant leap, growing by 50% YoY.
Looking ahead, BofA Securities has revised its advertising outlook downward but increased the estimated top-line growth for 2024 to 4% YoY from the previous forecast of 3%.
This revision is based on the expectation that the robust growth seen in the leads generation and dealership data businesses in the first quarter will continue through the rest of the year, thanks to their subscription-based model. In light of these updated estimates, the firm has raised its Discounted Cash Flow (DCF)-based price objective to $33 from $32.
InvestingPro Insights
Autohome Inc. (NYSE: ATHM) has demonstrated resilience in its recent financial performance, with a noteworthy increase in top-line growth and non-GAAP net profit. In light of this, InvestingPro data presents a deeper look into the company's financial health. Autohome boasts a strong Market Cap of $3.45 billion and maintains an attractive P/E Ratio of 12.75, which adjusts slightly to 13.34 when considering the last twelve months as of Q1 2024. The company's revenue growth for the same period stands at 3.66%, with a significant Gross Profit Margin of 82.4%, indicating efficient cost management relative to its revenue.
InvestingPro Tips highlight several strategic moves by Autohome's management that could impact investor perspectives. The company's aggressive share buyback strategy and a balance sheet that holds more cash than debt are notable. Additionally, Autohome is trading at a low revenue valuation multiple, which could attract investors looking for undervalued opportunities. Analysts also predict that the company will remain profitable this year, as evidenced by the profit reported over the last twelve months.
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