JD Shows Resilience Amid Coronavirus Mayhem, UBS Says

JD.Com Inc JD seems to be weathering the impact of the coronavirus outbreak better than expected and its business model exhibits resilience for the near and long term, according to UBS.

The JD Analyst

Jerry Liu maintained a Buy rating for JD.com, while raising the price target from $52 to $43. The analyst also named the stock as one of the top picks in the sector.

The JD Thesis

JD witness strong active customer growth in the fourth quarter, at 18.6% year-on-year versus the 4.4% reported for the same quarter in 2018. The strength was driven by Jingxi, a platform that targets lower tier cities, and the trend of customers turning to JD during the virus outbreak, Liu said in the note.

Backed by a high proportion of direct sales and self-operated logistics models, JD managed to return to around two-thirds of its normal logistics capacity shortly after the Chinese New Year, while competitors were struggling to resume 10%-20% of theirs, the analyst added.

Liu further said that management guided to revenue growth of at least 10% for the first quarter of 2020, while many investors were fearing a decline. He expressed optimism around the company being able to generate more than 20% growth in gross merchandise value and margin expansion the virus impact subsides.

JD Price Action

Shares of JD.com were down 1.80% to $42.52 at time of publication Tuesday.