Analysts Bump Up ZTO Express Price Target Post Q3 Results - ZTO Express (Cayman) (NYSE:ZTO)

BofA analyst Fan Tso upgraded ZTO Express (Cayman) Inc ZTO to Buy from Neutral and raised the price target to $36 (an upside of 24.8%), from $31.
The analyst's base case is now that the government's scrutiny over the industry's price war will remain in place as the country heads into the twice-a-decade party congress in 2022, which will cause recent industry price discipline to likely hold and provide ZTO with a stable average selling price outlook.
Tso now projects 25% volume growth and "flattish" unit revenue in 2022 for ZTO.
Macquarie analyst Ellie Jiang upgraded to Outperform from Neutral and raised the price target to $40.20, from $25.90, suggesting a 39.4% upside.
Jiang says the stock has been range-bound around $30 since June, and the positives are now outweighing negatives as ZTO has "recalibrated to focus on quality over quantity."
The analyst views the company's 30% growth earnings guidance in Q4 as "solid."
With competition in the express delivery industry further easing, average sales prices appear to have stabilized to some extent, which helps offset volume deceleration in e-commerce demand, says Jiang.
She expects ZTO to begin seeing benefits from the stabilizing pricing trend.
Recently, ZTO reported a third-quarter revenue increase of 11.3% year-over-year to RMB7.39 billion ($1.15 billion).
Gross profit increased 12.7% Y/Y to RMB1.57 billion ($243.3 million), and the margin rate was 21.2% compared to 21% in 3Q20.
Income from operations was RMB1.36 billion ($211.1 million), an increase of 16.4% Y/Y, with the margin at 18.4% versus 17.6% a year ago.
Adjusted EPADS were RMB1.43 ($0.22), a decrease of 6.5% from RMB1.53 last year.
Adjusted EBITDA increased by 17.4% Y/Y to RMB1.97 billion ($305.4 million).
Net cash provided by operating activities was $277.4 million.
Parcel volume increased 23.3% Y/Y to 5,700 million. The number of pickup/delivery outlets was over 30,300, and the number of direct network partners was over 5,600 as of September 30, 2021.
For FY21, the company expects Parcel volume of 22.2 billion - 22.7 billion, representing a 30.6% - 33.5% increase year over year.
Price Action: ZTO shares are trading higher by 11.3% at $32.09 during the pre-market session on Thursday.

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