Market Overview

KeyBanc Highlights Tencent And JD Concerns In Vipshop Downgrade

Share:
KeyBanc Highlights Tencent And JD Concerns In Vipshop Downgrade
Related VIPS
30 Stocks Moving In Monday's Pre-Market Session
Benzinga's Top Upgrades, Downgrades For October 10, 2018

Vipshop Holdings Ltd - ADR (NYSE: VIPS), a China-based e-commerce platform that focuses on discount sales, had a concerning earnings report Monday, which prompted KeyBanc to no longer hold a bullish stance on the stock.

The Analyst

KeyBanc Capital Markets' Hans Chung downgraded Vipshop from Overweight to Sector Weight with no assigned price target (prior price target of $20).

The Thesis

Vipshop in late 2017 secured a combined $863 million investment from fellow China-based giants JD.com Inc (NASDAQ: JD) and Tencent, but Monday's earnings report showed initial results from the partnerships is below expectations, Chung said in the downgrade note. Specifically, Vipshop's shortfall in the quarter is attributed to low conversions from UVs into orders on Tencent's WeChat Wallet entry and low click-through on the Vipshop entry on the JD mobile app.

Chung did say Vipshop has a strategy to improve conversion ahead, including more data integration and social e-commerce promotions on WeChat and more personalized recommendations and access points on JD's platform. Exiting Monday's report, however, it's apparent the partnership needs "more time and effort" before it can see any meaningful traction.

Bottom line, it's difficult to downgrade Vipshop's stock given the real growth opportunities through the partnerships with Tencent and JD, the analyst wrote. But the fact is the "uncertain visibility" of their contributions to Vipshop's business calls into question the potential for growth re-acceleration and multiple expansion ahead.

Price Action

Shares of Vipshop were trading lower by 0.6 percent early Wednesday morning after falling nearly 20 percent to close Tuesday at $12.08.

Related Links:

Trump's $60B Tariff Plan Rattles Markets, Chinese Tech Stocks

Analyst: There's More To The Vipshop Rally Than Hope

Latest Ratings for VIPS

DateFirmActionFromTo
Oct 2018UBSMaintainsNeutralNeutral
Oct 2018JP MorganDowngradesOverweightNeutral
Aug 2018MacquarieMaintainsOutperformOutperform

View More Analyst Ratings for VIPS
View the Latest Analyst Ratings

Posted-In: China ecommerce Hans Chung KeyBanc Capital MarketsAnalyst Color Downgrades Top Stories Analyst Ratings Best of Benzinga

 

Related Articles (VIPS + JD)

View Comments and Join the Discussion!

Latest Ratings

StockFirmActionPT
ETTXWedbushInitiates Coverage On19.0
WINGWedbushDowngrades0.0
BMYCitigroupDowngrades57.0
INTCNomuraUpgrades0.0
HRZNKeefe Bruyette & WoodsDowngrades10.0
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.

Analyst Likes Chipotle's New CEO, Upgrades Stock To Buy

First Trust Launches Another Dorsey Wright ETF