Analysts have modestly raised their fair value estimate for Grab Holdings to $6.83, citing stronger-than-expected third quarter results and continued momentum in key growth metrics.
Analyst Commentary
Recent analyst reviews reflect a largely positive sentiment toward Grab Holdings, with some maintaining a degree of caution following the company's strong share price performance. The following summarizes the main bullish and bearish perspectives gathered from the latest research notes:
Bullish Takeaways- Bullish analysts have raised their price targets for Grab Holdings, citing stronger-than-expected third quarter results and raised guidance for fiscal year 2025.
- Analysts note that Grab has consistently outperformed key growth metrics, surpassing both top and bottom line consensus expectations.
- Several analysts highlight the company’s continued scale-led cost efficiencies. This is expected to support further market share gains and long-term secular growth across Southeast Asia.
- There is optimism about management’s pivot toward scaling topline growth in future years. This is underpinned by sustained momentum in Gross Merchandise Value and user engagement.
- Bearish analysts caution that after a 30% rally in the stock off last month’s low, a valuation reset may be warranted. This has prompted some to downgrade their ratings despite increasing price targets.
- Profitability improvements could face headwinds if management prioritizes topline expansion over margin optimization in upcoming financial periods.
- The recent upgrades to price targets are seen by some as already reflecting much of the near-term operational improvement. This could limit further upside in the stock price.
- Some analysts maintain neutral or hold ratings and emphasize the need for continued execution to justify current valuation multiples amid rising competition in the region.
What's in the News
- Grab and GoTo are reportedly in talks to offer Indonesia's sovereign wealth fund a "golden share" as part of negotiations over a potential $29 billion merger. This would grant the fund special rights in Indonesian operations (Financial Times).
- Indonesia is actively discussing plans to merge Grab and its rival GoTo, with government officials indicating that a decision could be announced soon. Such a merger would consolidate over 91% of market share in the country (Reuters).
- Grab, in partnership with WeRide, has received regulatory approval to conduct autonomous vehicle testing in Singapore's Punggol district. There are plans to significantly expand test runs for its Ai.R autonomous shuttle fleet by the end of the year.
- Grab Holdings updated its FY2025 guidance and now expects group revenue of $3.38 to $3.40 billion, up from the previous range of $3.33 to $3.40 billion.
Valuation Changes
- Fair Value Estimate: Increased slightly from $6.80 to $6.83 per share, reflecting an improved outlook.
- Discount Rate: Edged up marginally from 7.65% to 7.66%, indicating a modest change in risk assumptions.
- Revenue Growth: Remains unchanged at approximately 22.6% year-over-year, indicating stable expectations for topline expansion.
- Net Profit Margin: Holds steady at 15.6%, with no significant adjustment in profitability projections.
- Future P/E Ratio: Decreased slightly from 39.10x to 38.04x, suggesting modestly lower future earnings multiple expectations.
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