Morgan Stanley (NYSE:MS) analysts Seyon Park and Kelly Kim initiated Coupang (CPNG) with an Overweight rating in a note to investors Wednesday, stating it is "a unique e-commerce platform now at a discount."
"We believe Coupang's dominant position, with its fulfillment and logistics infrastructure, makes it a unique asset which should support further market share gains and generate cash flows. A share price correction has made valuations compelling," the analysts wrote.
Morgan Stanley set an $18 price target on the stock, explaining the South Korean e-commerce firm has a "dominant lead in logistics infrastructure to drive sustained market share gains."
"We believe the company's early, aggressive investments in fulfillment and logistics give it a clear competitive edge over peers, which should allow it to continue to gain share in Korea's still fast-growing e-commerce market. We forecast GMV to grow at a 15%four-year CAGR, to US$55bn by 2025, implying market share grows to 34% from 24% in 2021."
The analysts also stated the "pivot to profitability indicates positive EBITDA likely to be faster and sharper than consensus," while at "today's US$23bn market capitalization, the growth and profitability hurdles the stock needs to meet to justify valuations are looking much more feasible."
"On our estimates, the shares are trading at 32x 2024 and 14x 2025 EV/EBITDA, which positions it well versus global peers."
Coupang shares rose over 2% Wednesday.
By Sam Boughedda