So-Young Sinks 9.4% On 3Q Miss; Needham Lifts PT

Shares of So-Young International closed 9.4% lower on Wednesday after the China-based company, which provides an online platform for medical aesthetics, delivered lower-than-expected 3Q results. So-Young’s break-even earnings per ADS (American depository shares) slumped 96.6% year-over-year and fell short of analysts’ expectations of $0.04.

Its 3Q revenues of $53 million missed the consensus estimate of $54.7 million but grew 18.9%, driven by “increases in number of paying medical service providers which gradually recovered operation after the COVID-19 pandemic becomes better controlled in China,” the company said.

So-Young’s (SY) average mobile monthly active users jumped 153.7% to 8.7 million, while the number of paying medical service providers on its platform grew 26.8% to 4,096. The company said that about 251,928 users purchased the reservation service.

The company’s CEO, Xing Jin, said “We are pleased to report solid results for the third quarter, as the pandemic situation became more effectively controlled in China and the medical aesthetics and wellness industry is recovering.” He added that “During the quarter, one of our main initiatives for driving user growth and engagement was the release of our second version of the Emerald Doctor lists. This feature is becoming a standard of quality in the medical aesthetics industry.” (See SY stock analysis on TipRanks)

As for 4Q, So-Young anticipates revenue to be in the range of $61.9-66.3 million, which would represent year-over-year growth of 17.3%-25.6%. Analysts expect 4Q revenue of $67.2 million.

Following the results, Needham analyst Vincent Yu said, “SY is prioritizing its user base growth which has led to beats in MAU growth and paying user growth, a trend likely to continue.” He added that “Introduction of So-Young Pass helps convert paying users in the light treatment category, and positions SY better competitively.”

Yu reiterated a Buy rating and raised the stock’s price target to $16 (16.2% upside potential) from $13, as the analyst sees “more visibility in SY’s competitive and user acquisition strategy.” Shares have risen by about 12.7% year-to-date.

Related News:
Deere Issues Solid 2021 Guidance On Improving Farming Equipment Demand
Pure Storage Dips 5% As 3Q Sales Fall; Analyst Lifts PT
Nordstrom Jumps 6% On Surprise 3Q Profit; Street Sees 26% Downside

Amit Singh
Amit Singh has over eight years of strong experience (both sell-side and buy-side) in analyzing financial reports and filings as well as identifying strategic investment opportunities. Over the years, Amit has covered various industries and geographies, with a primary focus on consumer staples and the consumer discretionary sector. Amit’s background spans evaluating company portfolios, building complex financial models, writing financial articles, and identifying the overall financial worth of companies. He has a post-graduate diploma in finance.