On Monday, Citi updated its stance on Grab Holdings Inc. (NASDAQ:GRAB), increasing the price target to $5.10, up from the previous $5.00, while sustaining a Buy rating on the stock. The adjustment comes in anticipation of Grab's first-quarter earnings for 2024, which are expected to be released after the US markets close on May 15, 2024, corresponding to May 16 in Asia.
The firm anticipates a robust performance from Grab, particularly from its mobility sector, which may benefit from a surge in inbound tourism. Other business segments like Delivery, Fintech, and Enterprise are projected to deliver results in line with expectations. Citi notes that Grab is set to alter its segment reporting with the first-quarter results. This change will involve reallocating Enterprise revenues, primarily from advertisements, to the Delivery segment, shifting payment transaction costs from Fintech back to the Delivery and Mobility segments, and distributing regional corporate costs to the respective business units.
Citi's analyst believes that Grab is likely to maintain or possibly slightly increase its revenue and adjusted EBITDA guidance for the full year 2024. Following a revision of estimates, the sum-of-the-parts (SOTP) valuation has been adjusted to $5.10, looking ahead to the 2025 estimates.
The upcoming financial reporting changes are expected to offer more transparency and make Grab's results more comparable to its industry peers. Coupled with improving execution and a leading market position, Citi views Grab as a company that will progressively appeal to regional long-term investors, given its exposure to the Southeast Asian on-demand services market.
InvestingPro Insights
As Grab Holdings Inc. (NASDAQ:GRAB) prepares to release its first-quarter earnings, a glimpse into the company's financial health through InvestingPro's real-time data reveals a mixed picture. The company's market capitalization stands at $13.89 billion, reflecting investor confidence in its growth potential. This is underscored by an impressive revenue growth of 64.62% in the last twelve months as of Q4 2023, signaling strong business expansion. However, the company's profitability challenges are evident, with a negative P/E ratio of -34.3, indicating that it has not generated net income over the past year.
InvestingPro Tips suggest that Grab's financial stability is supported by having more cash than debt on its balance sheet, which is a positive sign for investors concerned about the company's solvency. Additionally, Grab's liquid assets surpass its short-term obligations, providing a cushion for operational needs or unforeseen expenses. On the flip side, analysts do not anticipate the company will be profitable this year, and it does not pay a dividend, which could be a consideration for income-focused investors.
For those looking to dive deeper into Grab's financials and future prospects, InvestingPro offers additional insights. With the coupon code PRONEWS24, readers can get an extra 10% off a yearly or biyearly Pro and Pro+ subscription, gaining access to a wealth of information. There are 16 more InvestingPro Tips available, which could provide valuable guidance in making informed investment decisions ahead of Grab's earnings release.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.