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At Current Valuation, Baozun Shares Have All The Positive Priced In

At Current Valuation, Baozun Shares Have All The Positive Priced In
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Baozun Inc (ADR) (NASDAQ: BZUN), a China-based ecommerce solutions provider, reported its second-quarter earnings results which prompted analysts at Deutsche Bank to downgrade the stock. Analyst Eileen Deng downgraded Baozun from Buy to Hold, with a price target boosted from $25 to $30.

Baozun's gross merchandise volume growth during its second quarter was strong and rose 63.5 percent year-over-year, ahead of the analyst's expectations of a 58 percent growth rate. Revenue, net income and guidance for the third quarter were also ahead of expectations but the case for buying the stock has come to an end.

Baozun is expected to oversee an investment of RMB15-20 million ($2.25 million to $3 million) in its SaaS product and other IT capabilities, Deng noted. On top of that the company plans to expand its Shopdog business and these investments implies both margin pressure in 2018 and limited revenue contributions from the investments.

The analyst's new price target of $30 implies a 29x multiple on 2018's P/E, which is a slight premium to Alibaba's 28x P/E multiple and a discount to Alibaba's e-commerce target P/E of 33x.

"The stock has risen 18% in the past six months (vs. Nasdaq 8%)," the analyst wrote. "We think the CY18E 30x P/E is already reflected in future catalysts. Downgrading to Hold on valuation."

Related Links:

Benzinga's Top Upgrades, Downgrades For August 23, 2017

Chinese E-Commerce Companies Are Gaining On High Volume

Latest Ratings for BZUN

Jan 2018Bank of AmericaMaintainsBuyBuy
Sep 2017Bank of AmericaMaintainsBuy
Aug 2017Deutsche BankDowngradesBuyHold

View More Analyst Ratings for BZUN
View the Latest Analyst Ratings

Posted-In: Baozun China China eCommerce Eileen DengAnalyst Color Downgrades Price Target Analyst Ratings Best of Benzinga


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EMNMorgan StanleyUpgrades90.0
DERMRaymond JamesUpgrades0.0
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