JD.com Gains Traction In Retail, Delivery As Analyst Flags Margin Risks

Wall Street analysts rerated JD.com, Inc JD on Wednesday, including slashing their price targets after the company reported first-quarter results on Tuesday.

The stock is trading lower on Wednesday.

Benchmark analyst Fawne Jiang maintained JD.com with a Buy and lowered the price target from $58 to $53.

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Jiang noted that net revenue was 301 billion Chinese yuan (+15.8%) or $41.5 billion, beating consensus expectations by 11 billion Chinese yuan.

Notably, thanks to the trade-in program, growth of 3C and home appliances accelerated to 17% while gross margin also accelerated to 15% growth (versus 11% prior), thanks to improvements in user growth and engagement, with supermarkets continuing to outperform at double-digit growth, the analyst said.  

Adjusted EPADS came in at 8.41 Chinese yuan (or $1.16), beating consensus by $0.19.

He added that the company had repurchased $1.5 billion in shares year-to-date, reducing its share count by 2.8%.

Management highlighted continued policy tailwinds and improving organic growth year-to-date. With improving consumer sentiment and ongoing enhancements to its ecosystem, the company raised its fiscal 2025 retail growth outlook to double-digit growth (versus high-single-digit prior).  

Management noted sustained momentum in the second quarter. General merchandise categories exhibited solid growth, bolstered by supermarket and fashion categories.  

While the comparison will be tough heading into fiscal 2026, Jiang is encouraged by the momentum in gross margin, the focus on the 3P marketplace, and the planned revamp of key categories (such as fashion). According to the analyst, these factors will drive sustainable long-term growth.

In the first quarter, JD also entered the food delivery market and achieved impressive traction, with daily orders approaching 20 million within three months. While Jiang noted the move as strategic and saw significant potential in food delivery and the broader on-demand retail ecosystem, the investment introduces margin uncertainty for the remainder of the year, if not longer.

Given the need to dynamically adjust promotional strategies, expansion plans, and monetization pace in response to a fluid macroeconomic and competitive environment, JD withdrew its fiscal 2025 group-level profitability guidance, citing limited visibility and ongoing market volatility. Based on the current subsidy levels and cost structure, the analyst estimated increased pressure on margins and revised his earnings forecasts accordingly.

Jiang raised his fiscal 2025 and 2026 revenue estimates to 1.290 trillion Chinese yuan (+11.6%) and 1.342 trillion Chinese yuan (+3.8%), respectively. However, the analyst lowered his adjusted adjusted EPADS estimates to $4.61 for fiscal 2025 and $4.95 for fiscal 2026.

Price Action: JD stock is up 4% at $35.74 at last check on Wednesday.

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