Citi Initiates Coverage of Chagee Holdings (CHA) Stock with Buy Rating

On June 4, analysts at Citi initiated coverage on Chagee Holdings Limited (NASDAQ:CHA)’s stock with a “Buy” rating and a price objective of $43.70. The firm’s analyst, Xiaopo Wei, mentioned that the company happens to be a fast-growing premium tea play. The analyst believes that the company can continue to grow rapidly abroad as it uses its automation and standardization capabilities.

Citi initiates Chagee Holdings (CHA) Stock with Buy

Given that Chagee Holdings Limited (NASDAQ:CHA) is a leader in the premium segment, it continues to differentiate itself from most value players, thanks to its long-term product strategy (simple core menu), managed franchise model, robust brand equity (due to social-media marketing), and increased efficiency (through automation and standardization), added Wei.

Furthermore, the firm drew parallels between the present tea market and China’s sportswear sector, focusing on the franchise-dominant model prevalent in both. As a result, the comparison highlights the potential for consolidation in the tea market, as was witnessed in sportswear.

Overall, the firm remains confident in Chagee Holdings Limited (NASDAQ:CHA)’s ability to use its strategic advantages. The company’s approach can result in consumer loyalty and repurchases, placing it favorably in the broader competitive market landscape. In Q1 2025, Chagee Holdings Limited (NASDAQ:CHA) stated that total GMV generated came in at RMB8,226.8 million, reflecting a rise of 38.0% from Q1 2024. This is aided by the increased GMV of both Greater China and overseas teahouses.

While we acknowledge the potential of CHA to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk.  If you are looking for an AI stock that is more promising than CHA and that has 100x upside potential, check out our report about this cheapest AI stock.

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Disclosure: None.