Categories Consumer

Luckin Coffee is already pleasing Wall Street analysts

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.

luckin coffee
Image: Luckin Coffee

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.

Browse through our earnings calendar and get all scheduled earnings announcements, analyst/investor conference and much more!

Most Popular

WBA Earnings Preview: Will Walgreens’ Q3 report bring cheer to investors?

Walgreens Boots Alliance, Inc. (NASDAQ: WBA) has been facing challenges due to higher operating costs, rising competition, and an unfavorable retail environment. These factors have put pressure on the drugstore

Main points from Accenture’s (ACN) Q3 2024 earnings report

Shares of Accenture (NYSE: ACN) rose 6% on Thursday, following the company’s announcement of its third-quarter 2024 earnings results. Although revenue and profits missed expectations, the stock jumped after the

ACB Earnings: Aurora Cannabis reports narrower Q4 loss on higher revenues

Aurora Cannabis, Inc. (NASDAQ: ACB) on Thursday reported a net loss for the fourth quarter of 2024. The company’s revenues moved up 5% year-over-year during the quarter. The Canada-based recreational

Add Comment
Loading...
Cancel
Viewing Highlight
Loading...
Highlight
Close
Top