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MakeMyTrip Ltd. (NASDAQ: MMYT) had its price target reduced by BofA Global Research to $107 from $120, representing a more cautious view after a sharp appreciation in its share price and changing market conditions.
Major Points
Price Target Revision: BofA's new price target of $107 follows a prior bullish call, with the company having held a Buy rating and higher targets during the year to date. The revision follows a sharp rally in MakeMyTrip's stock, which has risen almost three times since August 2023, and currently trades at high valuation multiples.
Growth and Profitability: In spite of the target reduction, MakeMyTrip keeps delivering strong financials. The company has just reported 22% year-on-year top-line growth, with solid gains in flights and hotels segments. Its EBITDA and net income have also reported healthy rises, supported by a gross profit margin of over 53%.
Market Position and Strategy: Analysts point to MakeMyTrip's leadership market position, minimal competition, and strategic emphasis on direct hotel contracting in Southeast Asia and the Middle East, which is likely to drive future margin growth. The firm's $150 million share buyback program is also viewed as a bullish action for the stock.
Valuation and Outlook: The price target reduction is due to the stock's elevated valuation following its recent surge and requirement of even greater growth-particularly in the hotel segment-to support further upside. BofA and other top analysts, such as JPMorgan and Goldman Sachs, however, continue with optimistic ratings, pointing to MakeMyTrip's resilience, strong repeat customer base, and continued innovation in AI and global expansion.
Though BofA has adjusted its expectations, MakeMyTrip is still a leader in the growing online travel space, with analysts fairly upbeat on its long-term growth trend.
Sources: Investing.com, Macquarie through Investing.com, Yahoo Finance
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