The Chinese food delivery behemoth Meituan, announced a share buyback and reported better-than-expected quarterly results, which sent its shares skyrocketing.
Throughout the week, the business's Hong Kong-listed stock had increased by 7.75% Hong Kong dollars, with the largest daily percentage achievement in six months.
Meituan Showed An Upbeat Earnings Report
The Beijing-based business reported on Wednesday that its revenue increased 21% to 82.25 billion yuan from a year prior and that its net earnings more than tripled to 11.35 billion yuan, or US$1.59 billion. Both figures beat estimates.
The food delivery company later announced in an additional filing that it would buy back up to US$1.0 billion worth of shares, citing optimism about its company's outlook and prospects.
Notwithstanding an adverse macroeconomic setting, Meituan produced better-than-expected outcomes, according to a research note from Citi economists led by Alicia Yap.
According to them, cost efficiency and other factors may cause the business's increase in profits to surpass that of earnings and total transaction value growth in the second quarter of 2024.
Analysts' Opinion on Meituan Stock
Analysts Jialong Shi and Rachel Guo of Nomura stated in a note that "all of [Meituan] business segments reported better-than-expected results."
Additionally, they emphasized that Meituan anticipates robust volume growth in its primary food delivery business in the subsequent half, which could allay worries about the stock.
On Meituan, Citi and Nomura kept their buy ratings. Nomura maintained the target price at HK$135.00, but Citi increased it to HK$155.00 from HK$140.00.
Meituan Stock Technical Analysis
In MEITUAN's daily chart, the ongoing buying pressure is visible. The most recent Meituan stock price trades within a bullish rally-base-rally formation. Moreover, the monthly candle trades higher after four corrective months. The price went below the July 2024 low and formed an immediate bullish recovery, suggesting a potential bearish liquidity sweep.
In the daily chart, the current Meituan stock price trades within a descending channel, suggesting a corrective market pressure after a bull run. In that case, a valid bullish breakout from the channel resistance could be a potential trend trading opportunity.
Based on the bullish outlook of MEITUAN hk stock, a bullish daily candle above the 120.00 psychological line could validate the bullish continuation, aiming for the 147.30 level.
On the other hand, a valid bearish reversal from the current trendline resistance might consolidate the price before forming a stable trend.
