On Thursday, Citi up to date its outlook on Autohome Inc. (NYSE: ATHM) shares, elevating the value goal to $28.00 from the earlier $26.00, whereas retaining a Impartial stance on the inventory. The adjustment comes forward of the corporate’s third-quarter 2024 earnings report, which is anticipated on November 6, 2024.
The agency anticipates that Autohome’s income might fall in need of expectations, however earnings are projected to align intently with the consensus. The second half of 2024 is predicted to see a decline in promoting efficiency by authentic tools producers (OEMs) as a consequence of ongoing value competitors.
Nonetheless, lead technology is predicted to stay steady year-over-year, and the net market might expertise a slowdown. The introduction of latest power car (NEV) shops is more likely to counterbalance weaker tendencies in transaction and information merchandise.
Citi foresees that adjusted earnings will stay steady within the third quarter of 2024, bolstered by tax advantages. Nonetheless, there’s a concern that earnings might deteriorate within the fourth quarter of 2024 if the top-line weakens. Consequently, the agency has revised its earnings estimates for 2024, 2025, and 2026 downwards by 6%, 1%, and a couple of%, respectively.
The brand new value goal displays the affect of Autohome’s newest 12-month share repurchase program, valued at $200 million. Citi expects that the corporate will aggressively execute this buyback plan, which would scale back the variety of American Depositary Shares (ADS) in circulation.
Regardless of the subdued fundamentals, Citi believes that the potential for passable shareholder returns justifies sustaining the Impartial ranking on the inventory.
In different latest information, Autohome Inc. has reported a gradual rise in its second-quarter and interim 2024 earnings. The corporate’s complete revenues grew by 2.2% year-over-year, reaching RMB1.87 billion. The adjusted web revenue attributable to Autohome was RMB572 million, with a web revenue margin of 30.6%.
The net market and different companies contributed considerably to this progress, accounting for 33.1% of the overall income. The corporate’s new power automobiles (NEVs) and information merchandise additionally skilled substantial progress.
Autohome is increasing its new retail enterprise and digitalization efforts, together with partnerships with Ping An Group. Additionally it is specializing in capability constructing and rising its stock of high-quality, authenticated automobiles. The corporate’s satellite tv for pc retailer mannequin for NEVs is increasing to cowl extra low-tier cities.
Regardless of some challenges, administration stays assured within the long-term progress potential of China’s auto trade. The corporate is addressing competitors with product enhancements and consumer expertise enhancements. Autohome’s dedication to innovation and consumer expertise is obvious by their introduction of latest content material codecs and their collaboration with pan-media platforms.
InvestingPro Insights
To enhance Citi’s evaluation of Autohome Inc. (NYSE: ATHM), latest information from InvestingPro affords further perspective on the corporate’s monetary well being and market place. Regardless of Citi’s considerations about potential income shortfalls, Autohome’s financials present some strengths.
In accordance with InvestingPro information, Autohome boasts spectacular gross revenue margins of 82.28% for the final twelve months as of Q2 2024. This aligns with one of many InvestingPro Suggestions, which highlights the corporate’s “impressive gross profit margins.” This strong profitability might present a buffer in opposition to the anticipated promoting efficiency decline from OEMs.
One other InvestingPro Tip notes that Autohome is “trading at a low revenue valuation multiple.” This might be engaging to worth traders, particularly contemplating the corporate’s P/E ratio of 11.63, which is comparatively low for the tech sector.
Furthermore, Autohome’s sturdy steadiness sheet is obvious from one other tip stating it “holds more cash than debt on its balance sheet,” doubtlessly supporting the aggressive share buyback program Citi talked about.
Buyers may additionally have an interest to know that Autohome has “maintained dividend payments for 5 consecutive years,” in accordance with InvestingPro Suggestions. The present dividend yield stands at 1.89%, which might present some revenue stability for shareholders in periods of market volatility.
For these contemplating a deeper dive into Autohome’s prospects, InvestingPro affords 8 further suggestions, offering a extra complete view of the corporate’s monetary place and market efficiency.
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