Full Truck Alliance is likely to see its shares rise as it enters an “earnings upcycle” and powers past recent headwinds, according to Bank of America. The bank initiated coverage of the Chinese freight company with a buy rating. It also put an $11.3 price target, suggesting 31% upside from Monday’s close. “FTA, operating as the ‘Uber for freight’ by shipper-trucker matching at scale, is the largest digital freight matching platform in China’s highly fragmented [full truckload] and [less-than-truckload] markets, though it commands only an estimated ~6% market share by [gross transaction value],” analyst Fan Tso said in a note to clients. “We expect FTA to enter a renewed earnings upcycle … driven by monetization improvements rather than volume alone.” The stock has fallen more than 17% in the year to date, coming under pressure due to the cancellation of its value-added tax rebates and its proactive crackdown on low-priced orders. However, FTA is likely to benefit from “clear upside from monetization improvements,” allowing it to enter an earnings upcycle, Tso noted. Bank of America’s call falls in line with consensus on the Street. Of the 15 analysts covering the stock, 11 have a buy or strong buy on shares, LSEG data shows. The stock traded nearly 3% higher following BofA’s bullish call.
