What happened

Shares of Miniso Group Holdings (NYSE:MNSO) were moving higher today after the fast-expanding China-based retailer got an increased price target from Goldman Sachs, following its first-quarter earnings report last Friday.

As a result, the stock was up 16.8% as of 3:37 p.m. EST on Monday.

A ribbon-cutting at a Miniso store

Image source: Miniso Group.

So what

Analyst Michelle Cheng had previously initiated coverage on the stock with a buy, and today raised her price target on Miniso from $25.20 to $28.80, following the earnings release last week.

The Chinese value retailer continued to experience significant headwinds from the COVID-19 pandemic as revenue fell 31% in the quarter and its loss from continuing operations also jumped. But it showed progress emerging from the depths of the crisis and continued to expand, adding 108 stores during the quarter ended Sept. 30 to bring its grand total to 4,330.

Cheng had previously touted the company's ability to capture market share since it has a unique brand and is expanding outside of China as well. The stores have drawn comparisons to Uniqlo, a Japanese retailer known for value and modern design.

Now what

The price-target hike approximates Miniso's gains today, and since this stock is not closely followed by Wall Street, Cheng's commentary seems to carry outsize weight. Shares fell 1% on the actual earnings report on Friday. 

Miniso's guidance called for revenue growth to improve sequentially from a decline of 31% to a decline of 18%, and its forecast for the current quarter was $352.2 million at the midpoint, better than Cheng's own estimate of $347.3 million. She appears to be the only analyst currently following the stock, which also explains her exaggerated influence over the direction, in addition to the Goldman Sachs imprimatur.

Minoso shares are now up about 40% from its $20 IPO price in October. It remains one of the more intriguing stories in the retail sector, and the stock is priced for growth despite the pandemic-related challenges.


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