Citi Trims JD.com Price Target Heading Into Q2 Earnings Release

Citi’s Alicia Yap expects JD.Com Inc(ADR) JD to report its 2Q16 mostly in line with expectations when it announced its results on August 10.

Yap maintains a Buy rating on the company, while lowering the price target from $31 to $32.

2Q16 Expectations

The analyst expects JD.com to report total revenue growth of 41.2 percent year-on-year and 20 percent quarter-on-quarter to Rmb64.84 billion (US$9.81 billion), in line with the guidance range but marginally below consensus.

Non-GAAP net loss is expected at -Rmb739 million or -Rmb0.54 (-US$0.08), again missing the consensus expectations.

Related Link: T.H. Capital Downgrades JD.com To Hold

Gross margins are expected at 13.6 percent, with non-GAAP operating margin of -0.9 percent. Total GMV is expected to grow 39 percent year-on-year to Rmb159 billion.

3Q16 Outlook

For 3Q16, Yap estimates total net revenue growth of 36 percent year on year to Rmb60.1 billion (US$9.09 billion), with non-GAAP net loss of Rmb951 million, compared to the consensus forecasts of Rmb61.3 billion and net profit of Rmb182 million.

“We believe JD is likely to provide 3Q16 net revs guidance in-line or slightly below consensus expectations,” Yap mentioned.

The revenue estimates for FY2016 and FY2017 have been lowered to reflect “potential headwinds from softer consumer spending on high-ticket electronic items and continued impact from anti-brushing clean-up.”

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