In a report released today, Joyce Ju from Bank of America Securities reiterated a Buy rating on Vipshop, with a price target of $17.20.
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Joyce Ju has given her Buy rating due to a combination of factors, including Vipshop’s expected performance and market conditions. The company is projected to meet its second-quarter guidance, with net revenue anticipated to align with consensus estimates, despite a year-over-year decline. This reflects a challenging environment for apparel demand and increased competition from larger platforms. However, Vipshop’s gross margin is expected to remain stable, supported by improved marketing and administrative efficiencies.
Furthermore, Joyce Ju highlights the company’s attractive valuation and capital returns as key reasons for the Buy rating. Despite lowering revenue and profit estimates slightly due to ongoing competitive pressures, Vipshop’s non-GAAP net margins are expected to improve gradually. This is attributed to anti-corruption efforts and the adoption of AI technologies. The company’s strong payout ratio and the potential for over 10% capital return yield further reinforce the positive outlook, justifying the Buy recommendation.