Bullish Analyst Steps Into Momo Inc (ADR) (MOMO); Sets $44 Price Target
Ronnie Moas Makes a Case for Rebound in Chinese Social Networking Firm Momo Inc
Standpoint Research analyst Ronnie Moas put out a bullish report on Momo Inc (ADR) (NASDAQ:MOMO) Wednesday, initiating a Buy rating and $44 price target, which represents a 22% premium to current trading levels. The analyst points out that the recent correction in the past two weeks has created a decent entry point for long-term investors who were looking to get in on this name. (To watch Moas’ track record, click here)
Moas wrote, “MOMO dropped by 20% in the last two weeks. If it goes back up to where it came down from you are looking at 33% upside — and I expect to see that by the end of next year. There are some concerns and disappointments from the recent earnings report – There was a disappointing growth figure on an important metric — paying live video users. MOMO relies on viewers who to tune in frequently and who pay. The engagement did not seem to support the recent quadrupling move in the share price. Additionally, this was the second straight quarter where expenses increased by more than the revenue growth did. There are also competitors MOMO must deal with such as YY, Tencent, Baidu and Alibaba. That being said — the stock, which was defended at other research firms following the news, is now trading at just 14X estimates for next year.”
“EPS growth is expected to be near 40% and revenue growth is expected to be close to 30%. The P/E/G ratio is well below 1.0 and quite attractive here on a valuation basis even if MOMO misses 2018 targets by a bit. The market cap is 6.7 billion dollars. MOMO has nearly one billion dollars in cash with no debt. Only half of the 200 million shares float freely. The headline numbers — revenue, net income and forecasts were solid,” the analyst added.
Where does the rest of the Street side on this volatile Chinese company? It appears mostly bullish, as TipRanks analytics demonstrate MOMO as a Buy.