Citi lowers HepsiBurada stock price target amid estimate changes

Citi analysts reduced their price target on HepsiBurada (HEPS) to $4.60 from $4.80, maintaining a Buy rating, as Kaspi's acquisition nears completion and a potential offer to minority shareholders looms. Kaspi plans to invest $300 million in its Turkish fintech strategy and expects to secure a banking license in Turkey in the second half of 2025, potentially boosting HepsiBurada's prospects. Separately, HepsiBurada's subsidiary, Hepsi Finansman A.Ş., completed a TRY 100 million bond issuance at a 43% annual interest rate to support its consumer finance business.

Analysis

Citi analysts have adjusted their price target for HepsiBurada (HEPS) to $4.60 from $4.80, while notably maintaining a Buy rating on the stock, which currently trades at $2.58. This revision reflects changes in estimates ahead of the anticipated completion of Kaspi’s acquisition of a controlling stake in HepsiBurada by January 2025. Kaspi's strategic involvement is viewed as a significant positive, with plans to invest approximately $300 million in its Turkish fintech strategy during 2025 and intentions to leverage its technology, super-app experience, and payment solutions to enhance HepsiBurada's prospects. Furthermore, Kaspi is expected to secure a banking license in Turkey in the second half of 2025, which could further bolster these initiatives. HepsiBurada has demonstrated robust top-line performance, with revenue growth of 43% over the last twelve months, and its upcoming earnings report on June 9 will be a key data point. Concurrently, Hepsiburada’s subsidiary, Hepsi Finansman A.Ş., has successfully completed a TRY 100 million bond issuance carrying a high annual interest rate of 43.00%, aimed at supporting the growth of its consumer finance business and expanding its Hepsipay fintech platform; this issuance is part of a larger approved program of up to TRY 1.05 billion.

Key Decisions for Investors

• Investors should consider the maintained Buy rating from Citi and the significant potential upside to the $4.60 price target from the current $2.58, driven by Kaspi's strategic initiatives and investment plans.
• Closely monitor the upcoming earnings report on June 9 for updates on operational performance and outlook, as well as progress on Kaspi's integration and its pursuit of a Turkish banking license.
• Evaluate the implications of the high 43.00% annual interest rate on the recent TRY 100 million bond issuance, as it may indicate elevated financing costs or specific market conditions in Turkey, despite its purpose of funding growth in the consumer finance segment.
• Be aware of Citi's anticipation of a potential future offer from Kaspi to minority shareholders, which could present a distinct event or catalyst for the stock.