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Citigroup upgraded the stock to a Buy rating this week. This change suggests the firm sees a better path for the business after its recent quarterly report, even as the company continues to spend heavily on its expansion into Taiwan and its luxury goods platform.
While other firms like Barclays and Bernstein kept their existing ratings, Citigroup's move stands out as a shift in sentiment. The average analyst target for the stock now sits at $25, which is well above its current price.
Source: Citigroup
The company brought in $10 billion in revenue this quarter, a 7 percent increase from last year. However, it lost 18 cents per share, which was nearly double the loss analysts had expected. A significant part of this drop came from costs related to a warehouse fire in Korea, which ate into profits.
The results show two different stories within the business. The core retail arm in South Korea grew at a modest 5 percent, while newer ventures like the expansion into Taiwan and food delivery grew much faster at 23 percent. For long-term owners, the question is whether these fast-growing international bets will eventually become profitable enough to offset the high costs of building out their delivery networks.
See the full quarter, and how our tracked metrics did
Source: 8-K filing
Sartori Cheese has partnered with the platform to expand its reach in the South Korean market. By using the company's established delivery network, the Wisconsin-based dairy firm can get its artisanal products to Korean customers more efficiently. While this is a small partnership for a company that does $34 billion in annual sales, it highlights how the logistics network is becoming a go-to bridge for international brands wanting to enter the Korean market.
Source: Business Wire
Management has missed expectations for five straight quarters. This suggests the business is becoming harder to predict as heavy spending on new markets like Taiwan and luxury goods eats into profits.
| Expectation | |
|---|---|
| EPS | $0.03 |
| Revenue | $10.33B |