Grab Holdings - 'Time to Board the Superapp,' Says Bernstein Analyst in Upgrade

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By Sam Boughedda

Grab Holdings Ltd (NASDAQ:GRAB) shares rose over 4% Tuesday after it was upgraded to Outperform from Market Perform by Bernstein analyst Venugopal Garre.

Grab is the developer of the Grab Superapp, which provides transportation, food delivery, and digital payments services.

The analyst, who cut the firm's price target on the stock to $3.04 from $3.52, told investors in a note that it is "time to board the superapp."

Garre said that despite the stock's 18% decline over the past month, they see an attractive risk-reward with the company being a beneficiary of the post-pandemic re-opening.

"Our upgrade primarily reflects the favorable risk-reward, improving momentum in Ride-hailing, which will offset a moderation in food and the potential long-term value from Fintech and Grocery," wrote the analyst.

"We expect a peaking of incentives in 1H and gradual improvements post that as driver supply slowly improves. A relatively benign competitive environment as competitors focus on profitability is additional support," he added.

While acknowledging the challenges of food delivery moderating following the post-pandemic re-opening, the lack of a supportive base, already high penetration, and competitive intensity, the analyst believes with Singapore, Indonesia, and the Philippines easing travel restrictions in March, Malaysia in April, and Thailand in Ma, Grab will benefit in the near term.

"Ride-hailing will benefit from the reopening, and the scale-up can be non-linear as demand for mobility normalizes and costs reduce with an increase in driver supply. Near term, while driver supply and fuel challenges remain, we see this reflected in valuations," wrote Garre.