Oppenheimer Remains Bullish On JD.com, Says 'User Acquisition On Strong Trend And Margin Expansion In Sight'

In a report published Wednesday, Oppenheimer analyst Ella Ji found plenty of positive takeaways from JD.Com Inc's JD fourth quarter results.

Ji noted that JD.com's organic gross merchandise volume accelerated to 105 percent year-over-year from 97 percent in the third quarter and 85 percent in the second quarter. In addition, Weixin/QQ now contributes 20 percent of new users should be further strengthened by the "robust" red envelope campaign. Ji also observed that customer cohort analysis shows shopping frequency increased to 19x in the fifth year (versus 7.1x in 2014).

Ji added that while management expects 2015 adjusted net margin guidance of negative 0.5 percent to zero percent, the analyst argued that upside from scalability and fast shift to marketplace business will yield a 0.3 percent gross margin improvement and that barring investments in new initiatives, the company's core business will achieve year-over-year margin expansion in 2015.

Ji also highlighted that the company's partnership with Tencent showed "further improvement" with the average daily gross merchandise volume of Tencent's Weixin and mobile QQ channels more than doubled quarter over quarter.

Shares remain Outperform rated with a $35 price target.