On Wednesday, Benchmark analyst Fawne Jiang revised the share price target of Momo Inc . (NASDAQ: NASDAQ:MOMO), a leading mobile social networking platform in China, decreasing it to $15.00 from the previous $16.00. Despite the reduction, the analyst maintained a Buy rating on the stock.
The adjustment followed a trading session on Tuesday where Momo's shares faced significant downward pressure. This was attributed to the company's first-quarter results, which, while not as bad as some had feared, were accompanied by a slightly reduced forecast for the full year of 2024.
The company is currently undergoing business adjustments aimed at eliminating less profitable revenue streams and enhancing regulatory compliance to minimize risks.
The analyst noted that Momo's more conservative approach to monetization might continue to impact its growth prospects in the near term. In light of these developments, Benchmark has moderately revised downward its fiscal year 2024 and 2025 estimates for the company.
Jiang's commentary highlighted the ongoing strategic changes Momo is implementing: "The more disciplined monetization approach could continue to pressure near quarters' growth outlook.
We moderately lowered our FY24/FY25 estimates to reflect the setback and consequently lowered our PT to $15."
This statement reflects the firm's updated stance on Momo's financial outlook in the context of its current business strategy and external regulatory environment.
InvestingPro Insights
As Momo Inc. (NASDAQ: MOMO) navigates through strategic changes and regulatory adjustments, real-time data from InvestingPro provides a deeper look into the company’s financial health and market position. With a market capitalization of $895.79 million and a strikingly low price-to-earnings (P/E) ratio of 5.02, Momo stands out in the market for its valuation. Adjusted figures for the last twelve months as of Q1 2024 show an even lower P/E ratio of 4.08, emphasizing the company's earnings power relative to its share price.
Despite a revenue decline of 5.1% over the last twelve months as of Q1 2024, Momo's gross profit margin remains robust at 41.55%, signifying the company's ability to retain a significant portion of its sales as gross profit. Furthermore, with a PEG ratio of 0.11, the stock may be undervalued relative to its earnings growth potential, which could intrigue value-oriented investors.
In addition to these metrics, InvestingPro Tips highlight that Momo has been aggressively buying back shares and holds more cash than debt on its balance sheet, which could be a sign of strength and confidence from management. Additionally, the company's RSI suggests the stock is in oversold territory, indicating that it might be undervalued at its current price levels. For readers looking for more insights, there are 18 additional InvestingPro Tips available, which can be accessed through the company's InvestingPro page: https://www.investing.com/pro/MOMO.
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