JPMorgan raised its rating on Chagee Holdings (NASDAQ:CHA) to Neutral from Underweight on Friday and simultaneously reduced its price target to $11.50 from $12.40. At the time of the revision the price target suggested about a 13% upside relative to the prevailing market price of $10.20, with shares trading only 3% above their 52-week low of $9.95.
The analyst move follows a difficult operating stretch for Chagee. The company has recorded five consecutive quarters of same-store sales declines beginning in the fourth quarter of 2024. The stock has also suffered material market devaluation, trading more than 60% below its initial public offering price of $28. Over the past year the shares have fallen nearly 67% and have lost about 50% of their value in the last six months.
JPMorgan underpins its more constructive stance with several considerations. The firm points to a higher probability of a turnaround in 2026 driven by newly announced initiatives and an expected positive effect from a Qwen subsidy. In addition, JPMorgan says consensus expectations for Chagee have been reset to more realistic levels and that the current valuation looks fair within the existing market context.
The bank maintained its target multiple for Chagee while revising the company model in advance of Chagee’s fourth quarter 2025 reporting. JPMorgan’s adjustments to its forecast reflect those updated assumptions rather than a change to the multiple it applies to the business.
Separately, Core AI Holdings Inc disclosed the establishment of a wholly owned subsidiary named Core Digital. The new unit is described as intended to enhance the company’s digital marketing capabilities by leveraging its machine learning and media analytics platform. Core Digital is framed as a next-generation ecosystem focusing on AI-driven digital marketing, tech-enabled interactions, and advertising delivery. The company characterized the launch as a strategic step to broaden its presence in the digital marketing sector and to integrate advanced technologies into its operations.
Summary
JPMorgan upgraded Chagee to Neutral and reduced its price target to $11.50, citing adjusted expectations, potential 2026 improvement supported by new initiatives, and an anticipated benefit from a Qwen subsidy. The firm also refined its financial model ahead of Chagee’s Q4 2025 results while keeping the target multiple unchanged.
Key points
- JPMorgan lifted Chagee’s rating from Underweight to Neutral and lowered its target to $11.50 from $12.40, implying about 13% upside from $10.20.
- Chagee has faced five straight quarters of same-store sales declines since Q4 2024 and a stock decline of roughly 60%-plus from its IPO level.
- Core AI Holdings created Core Digital, a wholly owned subsidiary focused on AI-driven digital marketing and media analytics.
Risks and uncertainties
- Continued same-store sales declines could further pressure Chagee’s operating performance and market valuation - affecting equity and consumer retail sectors.
- Market reaction to JPMorgan’s lower price target, despite the upgrade, may remain muted given the recent steep share declines - creating volatility for investors in small-cap retail stocks.
- Execution risk for new initiatives and the realization of any Qwen subsidy benefit could delay a potential turnaround beyond 2026 - impacting expectations for cash flow recovery.