Expect An In-Line Quarter From JD.com

SunTrust's Robert "Bob" Peck expects third quarter GMV/Revenue/gross profit of RMB 151.5 billion/RMB 60.4 billion/RMB 9.4 billion, in line with the Street.

Peck, who reiterated his Buy rating, warned that GMV growth for the third quarter could be challenged by seasonality, increased competition, anti-brushing, impacts from virtual goods and PaiPai comps.

Related Link: JD.com: Wal-Mart Buys, The Street Sells

However, the analyst noted that the company's scale and category mix shift is driving greater than 50 percent growth in gross profit growth, strong 1P profitability and free cash flow.

Peck put out a five-point list for investors to watch in the quarterly results:

1. "Ongoing impact to Marketplace GMV from new merchant mix, rationalized selection, and technology improvements to curb brushing."
2. "Investment of ~1 billion RMB in Yihaodian in 2H'16 on marketing, logistics, and overhead, which is LT strategic, but NT dilutive."
3. "We look for comments on the potential impact of Walmart's increased equity stake as well as Tencent's incremental purchases."
4. "JD Mall-only customer growth and competitive dynamics."
5. "Long term logistics strategy as fulfillment cost per item sees benefits from scale offset by higher investments in lower tier cities and FMCG push (lower basket sizes)."

The analyst also raised his price target to $31 from $27, while the stock is currently down 0.70 percent to $26.84.

Full ratings data available on Benzinga Pro.