Market Overview

If JD.com Falls After Q4 Print, KeyBanc Says Buy The Dip

Share:
If JD.com Falls After Q4 Print, KeyBanc Says Buy The Dip
Related JD
Q3 13F Roundup: How Buffett, Einhorn, Ackman And Others Adjusted Their Portfolio
Chinese E-Commerce Newbie Pinduoduo: What Makes It Tick?
Stocks To Watch: Paint It Black (Seeking Alpha)

JD.Com Inc(ADR) (NYSE: JD) is scheduled to report fourth-quarter results before Thursday's market open, and investors should be buyers of any weakness if the print disappoints, according to KeyBanc.

The Analyst

KeyBanc Capital Markets' Hans Chung maintains an Overweight rating on JD.com's stock with an unchanged $56 price target.

The Thesis

Beijing-based JD is likely to report a revenue beat in Q4, but there are some margin concerns, Chung said in a research report. Alibaba Group Holding Ltd (NYSE: BABA)'s increase in marketing expenses and increase in non-monetized ad inventory, coupled with a sequential decline in Vipshop Holdings Ltd - ADR (NYSE: VIP)'s active customers and strong e-commerce advertising at Baidu Inc (ADR) (NYSE: BIDU) could signal lower margins for JD in the quarter, the analyst said. 

Heightened promotional activity at JD could lead to higher gross merchandise volume growth, similar to what Alibaba reported in its recent quarter, Chung said. Over the longer term, JD's margin expansion story remains unchanged due to the following factors, the analyst said:

  • 1P's gross margin is "well below" rivals but its revenue scale is larger or at least similar to top retailers.
  • The company will see a mix shift from 1P to general merchandise, and apparel 3P should see a recovery in the bottom half of 2018.
  • JD could see fulfillment leverage from growing scale and logistics monetization.

The e-commerce retailer's path of margin expansion will likely be "more moderate" in the near- and mid-term, and any weakness following the upcoming earnings report should be taken advantage of by investors, Chung said. 

Price Action

Shares of JD.Com were trading lower by more than 3 percent at $47.32 at the time of publication Tuesday afternoon. 

Related Links:

Attention Contrarians: This Analyst Says JD.com Set Up Could Be In Your Favor

Want Some Exposure To China's Growth? Stifel Says Buy JD Or Alibaba

Latest Ratings for JD

DateFirmActionFromTo
Oct 2018KeyBancDowngradesOverweightSector Weight
Oct 2018UBSMaintainsBuyBuy
Aug 2018UBSMaintainsBuyBuy

View More Analyst Ratings for JD
View the Latest Analyst Ratings

Posted-In: 1P China China eCommerce Hans ChungAnalyst Color Price Target Reiteration Analyst Ratings Best of Benzinga

 

Related Articles (BIDU + BABA)

View Comments and Join the Discussion!

Latest Ratings

StockFirmActionPT
LXFTKeyBancDowngrades0.0
CPAImperial CapitalDowngrades68.0
PRMWImperial CapitalInitiates Coverage On18.0
TGTKeyBancInitiates Coverage On110.0
QCOMMorgan StanleyUpgrades0.0
View the Latest Analytics Ratings
Don't Miss Out!
Join Our Newsletter
Subscribe to:
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Fintech Focus
Your weekly roundup of hot topics in the exciting world of fintech.
Thank You
for registering for Benzinga’s newsletters and alerts.
• The Daily Analysts Ratings email will be received daily between 7am and 10am.
• The Market in 5 Minutes email will be received daily between 7am and 8am.
• The Fintech Focus email will be received every Friday between 2pm and 5pm.

Redtail Technology Was First To Bring Advisor Tech To The Cloud

Here's Why Loop Capital 'Begrudgingly' Downgraded Ingevity