UPDATE: Brean Capital Initiates Coverage On Jumei International

Fawne Jiang of Brean Capital initiated coverage of

on Friday with a Hold rating with no assigned price target. “We view Jumei as a smaller but critical player in the China eCommerce space, with market leadership in the beauty products vertical,” Jiang wrote. “While we are positive on the company's rapid growth in becoming the vertical leader and its effective marketing know-how, Jumei is encountering headwinds relating to its clean-up of counterfeit goods.” Jiang does note that Jumei is benefiting from solid beauty product retail growth, increasing penetration in mobile shopping and rapid mobile adoption. In fact, the analyst believes that the company is a “best in (online) beauty” company due to its marketing campaigns and a unique online shopping format. However, Jiang argues that as a small player, the impact of its headwinds (including counterfeit goods) should “weigh more heavily.” The analyst does note that potential catalysts including re-accelerating gross margin growth, change in government tax policies and resolution of current legal overhangs that favor the company could result in a more positive outlook on the stock.