Analyst Eddy Wang of Morgan Stanley maintained a Hold rating on JD, reducing the price target to $28.00.
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Eddy Wang has given his Hold rating due to a combination of factors impacting JD’s financial outlook. The company’s significant investment in the food delivery sector, amounting to over Rmb10bn, has led to a substantial year-over-year decline in non-GAAP net profit by 63%. Despite these investments, there are no clear indications of cross-selling benefits or synergies with JD’s core e-commerce business, as evidenced by the lack of significant revenue growth acceleration or margin improvement.
Looking ahead, JD is expected to maintain its level of investment in food delivery, especially during peak periods, which could further pressure its profitability. The competitive landscape, with rivals like Alibaba and Meituan offering aggressive subsidies, adds to the challenges JD faces. Consequently, the earnings estimates for the coming years have been revised downwards, and the price target has been adjusted to US$28, reflecting a more cautious outlook on JD’s ability to achieve meaningful growth in the near term.
According to TipRanks, Wang is an analyst with an average return of -10.8% and a 26.79% success rate.
In another report released on June 24, Arete Research also downgraded the stock to a Hold with a $45.00 price target.