On Thursday, Citi reaffirmed its Buy rating on shares of Grab Holdings Inc. (NASDAQ:GRAB) with a steady price target of $5.00. The endorsement comes despite the company's total revenue falling slightly short of the consensus forecast. Citi's analysis indicates that the shortfall can be attributed to foreign exchange currency headwinds, which may not have been fully accounted for in the consensus estimates.
According to Citi, both Deliveries and Mobility Gross Merchandise Value (GMV) along with IFRS revenues were largely in line with their preliminary estimates. The firm also noted that Grab's unchanged full-year IFRS revenue and EBITDA guidance aligns with their expectations, considering the fluctuations in foreign exchange currency and results from the first half of the year that were close to their projections.
Citi's commentary suggested that while some may find the steady guidance disappointing in light of the previous two quarters' guidance revisions, the firm's outlook remains unchanged. The analyst highlighted areas of interest for further discussion, including the competitive landscape with new market entrants in local services, summer demand trends for the mobility business, and the progress of cross-selling initiatives.
Grab Holdings Inc., listed on the NASDAQ, has maintained its financial outlook for the year, which Citi believes is a reasonable stance in the face of varying foreign exchange rates and the company's performance in the first half of the year. The firm's analysis will continue to monitor the impact of new competitors and market demand on Grab's business operations.
In other recent news, Grab Holdings Limited experienced a drop in shares following its Q2 revenue results, which didn't meet analyst expectations. The Southeast Asian ride-hailing and delivery giant reported Q2 revenue of $664 million, a 17% increase year-over-year, but still short of the anticipated $675.24 million. Additionally, the company's adjusted loss per share was reported as $0.01, aligning with projections.
Despite the revenue shortfall, Grab's all-round segment growth was notable. However, the company's full-year 2024 revenue guidance of $2.7-$2.75 billion fell below analysts' $2.78 billion forecast, leading to investor disappointment. CEO and Co-Founder Anthony Tan emphasized the company's focus on product initiatives and cost discipline.
Recent developments also show an improvement in Grab's adjusted EBITDA to $64 million, compared to a negative $17 million last year, and a positive adjusted free cash flow of $36 million for the quarter. Furthermore, the company's monthly transacting users grew by 17% YoY to 40.9 million in Q2, and on-demand GMV increased by 13% YoY to $4.4 billion. Despite the revenue miss and weak guidance, these figures underscore Grab's continued growth and improved profitability metrics.
InvestingPro Insights
Grab Holdings Inc. (NASDAQ:GRAB) presents an interesting case for investors, as Citi maintains a Buy rating with a price target of $5.00. According to the latest InvestingPro data, Grab boasts a significant revenue growth of 43.76% over the last twelve months as of Q1 2024, highlighting the company's ability to expand its top-line earnings. Despite not being profitable in the last twelve months, with an operating income margin of -13.91%, Grab's market cap stands at a robust 13.32B USD, reflecting investor confidence in its growth potential.
InvestingPro Tips for Grab reveal that the company holds more cash than debt on its balance sheet and has liquid assets that exceed short-term obligations, suggesting a strong liquidity position. Although analysts do not expect the company to be profitable this year, the stock trades with low price volatility, which might appeal to risk-averse investors.
Moreover, Grab does not pay a dividend to shareholders, which is typical for companies focused on reinvesting earnings into growth opportunities. For investors seeking a more comprehensive analysis, there are additional InvestingPro Tips available at: https://www.investing.com/pro/GRAB
As market dynamics evolve, these financial metrics and tips from InvestingPro provide valuable context for understanding Grab's current standing and future prospects. With Citi's reaffirmation of its Buy rating and steady price target, these insights can help investors weigh the potential risks and rewards associated with Grab's stock.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.