J.P. Morgan raised Meituan-W to Overweight from Neutral, lifting its target price to HK$100 from HK$85. The upgrade follows Meituan's return to food-delivery profitability in the second quarter and its roughly 70 percent share of orders above RMB 30.
J.P. Morgan upgraded Meituan-W to Overweight from Neutral, raising its target price to HK$100 from HK$85 on structural profit improvement.
The upgrade reflects a shift in Meituan's investment case from "profit reversal not yet structurally proven" to "structural earnings improvement," according to J.P. Morgan's research report published Aug. 31. The new target implies 16 times forecast 2027 earnings.
Meituan's food-delivery business turned profitable in the second quarter, and management expects it to remain profitable in the third quarter even as seasonal delivery costs rise and the company increases membership and marketing spending. J.P. Morgan said Meituan holds about 70 percent of orders above RMB 30, with most share losses concentrated in orders below RMB 15 and tea-drink deliveries, limiting the impact on its high-value core business. The bank kept its 2028 food-delivery operating profit forecasts unchanged, projecting RMB 31 billion, RMB 26 billion and RMB 5 billion under scenarios of operational resilience, structural duopoly and fragmented oligopoly, respectively.
Meituan reported second-quarter revenue of RMB 104.6 billion, up 14.4 percent from a year earlier, with adjusted net profit of RMB 2.5 billion. Core local commerce revenue rose 10.1 percent to RMB 71.5 billion, and segment operating profit turned positive at RMB 5.7 billion. New initiatives revenue climbed 25 percent to RMB 33.1 billion, while the segment's operating loss narrowed sequentially to RMB 1.7 billion.
J.P. Morgan raised its 2025 revenue forecast 5 percent and adjusted EPS estimate to RMB 0.48, and lifted 2026 revenue and adjusted EPS forecasts 5 percent and 11 percent, citing better-than-expected delivery and new-business growth and disciplined investment. The bank's view suggests rivals such as Alibaba's Ele.me and ByteDance's Douyin have failed to convert subsidy-driven order volume into real share in high-value segments, where Meituan's core users and merchants remain largely unaffected.
Meituan shares rose 3.35 percent to HK$80.1 after the results, implying about 25 percent upside to the new target. The upgrade signals institutional conviction that Meituan's profitability recovery is durable. Investors will watch third-quarter unit economics, which management expects to improve year over year but weaken sequentially on seasonality, and the pace of subsidy normalization across the delivery industry.
This article is for informational purposes only and does not constitute investment advice.
