RBC Raises Jumia Technologies Price Target to $6.50

RBC Capital raised Jumia Technologies' price target to $6.50 from $5 and maintained a Sector Perform rating. The Q2 print showed improvement, raised guidance, and a faster journey to profitability. Physical order growth improved modestly and is expected to accelerate, while currency stabilization across its geographic footprint has become a tailwind.

Jumia Technologies (NYSE: JMIA) has seen its stock surge after RBC Capital analyst Brad Erickson raised the company's price target to $6.50 from $5. The move came following the company's second-quarter earnings report, which demonstrated significant improvements in key financial metrics. The e-commerce giant's shares climbed by over 11% on Monday, outpacing the S&P 500's 0.3% decline.

The quarterly results showed a 25% year-over-year increase in total sales to $45.6 million, surpassing the consensus estimate of $43 million. Gross merchandise value (GMV) also rose by 6% to $180 million, with physical goods GMV growing 10% year-over-year, excluding South Africa and Tunisia. The company's order count grew by 18% year-over-year, driven by strong execution and improved product assortment.

Despite these positive developments, Jumia Technologies reported an operating loss of over $20 million, deepening from the year-ago deficit of $16.5 million. However, RBC Capital's Erickson expressed a cautiously optimistic view of the company's second quarter, noting that the growth in order count could bring Jumia to profitability sooner than expected. He speculated that the company could achieve breakeven on the bottom line by the end of 2026.

Jumia's CEO Francis Dufay attributed the growth to macroeconomic and currency stabilization in key African markets. The company plans to break-even in Q4 2026 and achieve full-year profitability by 2027. Jumia has streamlined operations from 5,000 to 2,000 employees to improve cost-efficiency, focusing on core product categories such as electronics, phones, fashion, beauty, and home products.

However, the company continues to face significant challenges, including high currency devaluations, political instability, and inconsistent regulatory frameworks across African markets. Its proprietary logistics platform remains a capital-intensive burden with limited payoff. The company's valuation remains a concern, with a price-to-sales (P/S) ratio of approximately 1.1x, compared to 2.0x for Sea Limited (SE) and 5.2x for MercadoLibre (MELI).

In conclusion, Jumia Technologies' Q2 earnings report shows progress amidst challenging conditions. The company's path to profitability and sustainable growth remains uncertain, and long-term investors must weigh the risks and potential upside. The raise in the price target by RBC Capital reflects the market's optimism about Jumia's ability to execute its strategic shifts and unlock its fintech arm.

References:
[1] https://finance.yahoo.com/news/why-jumia-technologies-stock-surged-225911923.html
[2] https://www.ainvest.com/news/jumia-technologies-delivers-strong-q4-earnings-raises-guidance-2025-2508/
[3] https://seekingalpha.com/news/4481150-jumia-technologies-ag-reports-q2-results
[4] https://www.cnbcafrica.com/media/7754921563835/dufay-macro-currency-stability-favourable-to-jumias-growth-strategy/