On May 29, JPMorgan analyst Lin Chen upped ZTO Express (Cayman) Inc. (NYSE:ZTO)’s stock from “Neutral” to “Overweight,” and reduced the price objective to $21.00 from the prior target of $23.00.
A fleet of trucks speeding along an interstate highway delivering goods to distant customers.
The analyst believes that the cut-throat competition in the broader industry can result in consolidation in H2 2025. ZTO Express (Cayman) Inc., which has been tagged as a leading company, is anticipated to remain resilient and potentially benefit due to this consolidation.
This can be possible mainly through its efforts to reduce costs. Furthermore, JPMorgan believes that the upcoming inclusion of ZTO Express (Cayman) Inc. in the Hang Seng Index as a blue-chip stock can help improve liquidity and favourably affect the investor sentiments. This inclusion will be effective on June 6, 2025, after the market closes. Overall, the firm expects an improved risk/reward at the current price levels.
As per the analyst, the decline in industry’s average selling price (ASP) continues to put significant pressure on the lower-tier Tongda players. However, ZTO Express (Cayman) Inc. is being seen at an advantageous position. If the pricing continues to decline, some companies might face losses because of their limited capacity for cost reduction, unlike Tier 1 players such as ZTO Express (Cayman) Inc., contends Chen.
ZTO Express (Cayman) Inc. offers express delivery and other value-added logistics services.
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