Grab Holdings Ltd.’s impressive cost-cutting measures and strategic maneuvering to outpace competitors in Southeast Asia’s ride-hailing sector have propelled its stock performance beyond global peers this quarter. Analysts point to further potential gains on the horizon.
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Grab app interface on a smartphone.
Brokerages are rapidly raising Grab’s price target, with Evercore ISI International Ltd. highlighting increased profitability due to economies of scale. Bloomberg compiled data indicates an anticipated operating profit of $6.5 million in the current quarter, a significant improvement from the $38 million loss in the previous quarter.
Grab’s US-listed shares have soared 35% since late September, making it the top-performing ride-hailing stock globally. This turnaround is attributed to the company’s laser focus on cost reduction and expanding its user base.
“Grab’s sustained growth, dominant market share, and inherent scalability will drive substantial long-term profitability, mirroring Uber’s global success,” Evercore analysts, including Mark Mahaney, noted in a recent report.
Following a better-than-expected third-quarter profit announcement in early November, at least 22 analysts upwardly revised their target prices for Grab, according to Bloomberg data. The average analyst forecast suggests a potential 12-month price target of $5.55, representing an 8% increase from the stock’s most recent closing price.
Continued Growth and Emerging Challenges for Grab
Maybank Securities analyst Hussaini Saifee emphasized that Grab’s continued strength in its core services, coupled with the accelerated growth of its digital banking operations, will further bolster momentum in the fourth quarter. Analysts added that Grab’s significant scale advantage, absent in smaller competitors, enables the company to reduce customer incentives while enhancing income opportunities for its drivers.
Despite this positive trajectory, Grab faces the ongoing challenge of user acquisition in the region. A considerable gap remains in market penetration compared to global counterparts like Uber Technologies Inc.
Chart comparing Grab and GoTo market capitalization.
Elevated valuations could also pose a hurdle. Grab’s current price-to-book ratio stands at 3.2, surpassing Indonesian competitor GoTo Group’s 2.3. Morningstar Inc. Analyst Kai Wang suggests that both delivery and ride-sharing margins will need to expand significantly to sustain the current rally.
Southeast Asia’s Market Resilience and Investor Interest
Nevertheless, Southeast Asia’s market remains robust, largely insulated from potential trade tensions or tariff risks that might arise under a second Donald Trump presidency. Continued strong performance from Grab will likely maintain this upward momentum. Citigroup Inc. analyst Alicia Yap observed that the stock is “definitely attracting significant new interest from investors.” The region’s positive economic outlook and Grab’s strategic positioning suggest a promising future for the company.
