On Friday, BofA Securities adjusted its outlook on Coupang Inc (NYSE:), reducing the price target from $32.00 to $30.00 while keeping a Buy rating on the stock. According to InvestingPro data, the company has demonstrated impressive performance with a 50% return over the last year, and analysis suggests the stock is currently slightly undervalued. The revision comes as the firm anticipates the Eats™ segment’s FY25E adjusted EBITDA loss to remain nearly unchanged year-over-year, a departure from earlier expectations of a reduced loss. This projection is based on lower commission income forecasts.
The analysts at BofA Securities also took into account changes in currency exchange estimates, expecting an 8% average devaluation of the South Korean won against the U.S. dollar in FY25 and a 9% devaluation in FY26, compared to previous predictions. These foreign exchange adjustments have led to a downward revision of Coupang’s FY25 and FY26 earnings per share (EPS) estimates by 10.1% and 6.9%, respectively. Despite these adjustments, InvestingPro data shows robust revenue growth of nearly 25% in the last twelve months, with the company maintaining strong financial health metrics.
Despite this, BofA Securities remains optimistic about Coupang’s core commerce business, which is conducted in the local currency and continues to show robust growth. The analysts believe that the company’s strong performance, customer loyalty, and benefits from industry consolidation will contribute to its success.
The report also highlights the potential for Coupang to explore additional revenue streams, such as advertising, over a longer time frame. Furthermore, the analysts expect that the company’s scale effect, Free Last Click (FLC) advantage, and the turnaround of Farfetch (OTC:), an online luxury fashion retail platform in which Coupang has a stake, will lead to sequential improvements in margins. With its next earnings report due on March 4, 2025, investors can access comprehensive analysis and 12 additional key insights through InvestingPro’s detailed research reports.
In other recent news, Coupang Inc. reported strong Q3 results, showcasing a 27% year-over-year increase in total net revenues to $2.3 billion and a 45% rise in gross profit. Active customers increased by 11% with WOW members ordering nine times more than non-members. However, the company’s adjusted EBITDA fell short of expectations, reported at $343 million, a 5% shortfall compared to consensus estimates, due to an unforeseen rise in technology-related expenses.
Barclays (LON:) and CLSA maintained their positive outlook on Coupang, citing confidence in the company’s ability to navigate through these challenges and capitalize on future growth opportunities. Barclays analysts support Coupang’s strategy of significant investments in anticipation of strong future growth. They believe that the company’s margins could recover as early as the next quarter and advise investors to look beyond short-term fluctuations in financial results.
Coupang’s CEO, Bom Kim, highlighted the near break-even performance of Farfetch, indicating a cautious approach to new market expenditure. These recent developments underscore Coupang’s commitment to sustaining strong revenue growth and enhancing customer experience. The company reported a Q3 profit of $70 million and a diluted earnings per share of $0.04.
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