I am initiating on BitAuto (NYSE:BITA) with a cautious view and a $45 target price based on sum of parts, implying 20% downside to Friday's close.
The stock has been up 363% over the past year, compared with Nasdaq's 23% gain, mainly driven by 1) investor appetite for leaders in China's niche internet verticals, 2) success of EasyPass, or EP, monetization platform and 3) the prospect of BITA's new monetization EP model, which the market expects to accelerate BITA's revenue in the next two years.
My view is that the prospect of the new EP monetization platform has already baked into the stock price and that I feel the current valuation is rich with 36x FY14 consensus earnings...
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