This Chinese company is hardly two years old, it went public less than a month ago, and is already getting on the good side of Wall Street analysts. We are talking about Luckin Coffee (NASDAQ: LK), which, despite being smaller in size, is fast becoming a major competitor to Starbucks (NASDAQ: SBUX).
The company offers heavy discounts on its coffee, which can be ordered through a mobile app. Its shares have gained 5.6% since the IPO on May 16, when 33 million shares were offered at a price of $17 apiece.
Three analysts have already expressed positive opinion on the stock. Eric Gonzalez of KeyBanc has rated the stock overweight, as he feels the low-budget model and limited competition in the home market will work in favor of the company.
“Luckin Coffee’s rapid ascent toward becoming one of China’s largest consumer brands has attracted its fair share of skeptics. However, we believe the company has several strategic advantages that should support its transition into a profitable business,” he said.
KeyBlanc has a price target of $22 on the stock, which is at a 22% upside from the last close.
READ: Chewy is going public on Friday and investors are thrilled
Meanwhile, Needham analyst Vincent Yu sees the company breaking even as early as the third quarter of this year. However, he does not expect cash-flow break-even until another year.
Needham has a better price target of $27, with a buy rating.
Lillian Lou of Morgan Stanley said, “We expect Luckin’s implied market share to grow from 1% to 23% in 2018-21. Urbanization and the increasing adoption of coffee-drinking by younger generations will underpin this growth.”
However, he warns that the company’s success could depend on a lot of factors including the rising competition, management strategy, and consumer demands. Morgan Stanley has a more cautious price target of $21 on the stock.
Most Popular
Beyond Meat (BYND): These issues need to be worked out for the sake of the stock
Shares of Beyond Meat Inc. (NASDAQ: BYND) were down 4% on Wednesday. The stock has dropped 22% over the past 12 months and 16% since the beginning of this year.
Electronic Arts offers a unique buying opportunity as the COVID-led boom extends
The gaming industry witnessed a spike in demand after the coronavirus-related movement restrictions forced people to stay indoors. As the consumption of online content grew steadily, spending on video games
Electronic Arts (EA) Q4 earnings drop and miss estimates; revenue down 3%
Video game company Electronic Arts, Inc. (NASDAQ: EA) reported lower earnings and revenues for the fourth quarter of 2021. Earnings also missed analysts' forecast. During the March quarter, net bookings
