In a report released on February 21, Walter Woo from CMB International Securities maintained a Buy rating on Luckin Coffee (LKNCY – Research Report), with a price target of $38.51.
Walter Woo’s rating is based on Luckin Coffee’s robust performance metrics and strategic initiatives that position it for future growth. The company’s strong same-store sales growth (SSSG) and margin expansion in the fourth quarter of 2024 have been notable, and management remains confident about continued improvement in 2025. This optimism is backed by successful new product launches and increasing customer loyalty, as evidenced by the rise in monthly sales per customer.
Additionally, Luckin Coffee’s ability to navigate cost pressures, particularly from the coffee bean price crisis, is enhanced by its vertically integrated operations. Despite potential challenges, the company’s scale and operational efficiency are expected to support gross profit margin improvements. Walter Woo also highlights the stock’s attractive valuation, trading at 17 times the FY25E price-to-earnings ratio, compared to an industry average of 22 times, making it an appealing investment opportunity. As a result, the target price has been raised to $38.51, reflecting confidence in Luckin Coffee’s growth prospects.
Woo covers the Consumer Cyclical sector, focusing on stocks such as Yum China Holdings, Luckin Coffee, and ANTA Sports Products. According to TipRanks, Woo has an average return of 1.0% and a 49.41% success rate on recommended stocks.