UPDATE: Citi Upgrades Momo Inc. (MOMO) to Buy

(Updated - March 26, 2021 5:08 AM EDT)

Citi analyst Hillman Chan upgraded Momo Inc. (NASDAQ: MOMO) from Neutral to Buy with a price target of $19.30 (from $16.10).

The analyst comments "Momo’s 4Q20 rev was RMB3.80bn (+1% qoq or -19% yoy), 2%/3% ahead of our/consensus of RMB3.71bn/3.68bn. Adj. net profit was RMB836mn, 33%/35% above our/consensus, driven by better gross margin, opex savings and reverse of over-accrued tax expense. The company guided 1Q21 rev at RMB3.36-3.46bn (3.7%-6.5% yoy decline), with the mid-point 3% above consensus. Current market cap excluding net cash implies 2.5x 2022E P/E, pricing in the continued rev decline. We expect core Momo quarterly live streaming rev to bottom out in 1Q21E and model a qoq recovery starting from 2Q21E (+7%/+3%/+5% qoq for 2Q/3Q/4Q21E). Hence upgrade to Buy/1H on cheap valuation relative to peers and catalyst on core Momo live streaming rev qoq rebound from 2Q21E. We lift SOTP-based TP to US$19.3. Downside risks include 1) decreasing MAU/ user engagement; 2) worse-than-expected regulation limitation on tipping amount."

For an analyst ratings summary and ratings history on Momo Inc. click here. For more ratings news on Momo Inc. click here.

Shares of Momo Inc. closed at $13.95 yesterday.

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