On Friday, BofA Securities updated its outlook on NASDAQ:JD (NASDAQ:JD) stock, a prominent player in the e-commerce market. The firm raised its price target to $43.00, up from the previous target of $38.00, while reiterating a Buy rating.
JD.com reported quarterly net revenues of RMB 260 billion, marking a 7.0% year-over-year increase, which aligned with market expectations. The company's retail division, JD Retail (JDR), experienced a revenue growth of 7% year-over-year.
Notably, electronics and home appliances direct sales saw a 5% increase compared to the same period last year, continuing a healthy trend that began in the fourth quarter of the previous year.
The company's general merchandise segment showed a significant recovery, with an 8.6% year-over-year growth, a notable improvement from the stagnation observed last quarter. This resurgence is attributed to the recovery of the supermarket category and diminishing impacts from previous business optimizations.
Marketplace and marketing revenues saw a modest 1% year-over-year increase, with a strong double-digit growth in advertising revenues compensating for the decreased commission revenues, which resulted from fee reductions implemented to support the onboarding of new merchants.
JD.com's non-GAAP net profit stood at RMB 8.9 billion, surpassing consensus estimates by 20%. This beat was driven by a better-than-expected margin decline in JD Retail and improved margins in JD Logistics.
Looking ahead to the second quarter, JD.com has observed a continued healthy trend but remains cautious regarding demand uncertainty for the 6.18 promotional events, due to both a high comparison base from the previous year and increased competition.
For the full year of 2024, the company is confident in its ability to consolidate its market share among retailers, with expectations for gross merchandise volume (GMV) and revenue growth to surpass that of China's total retail sales.
Reflecting a more optimistic view on general merchandise sales, BofA Securities has adjusted its revenue growth projections for the next two years to 7%.
Consequently, the firm has revised its estimates for JD.com's net profit for fiscal years 2024-2025, with an increase ranging from 0-6%. The new price objective has been set at $43.00, equivalent to HK$169, up from the former target of $38.00 or HK$149. The Buy rating stands reaffirmed by the firm.
InvestingPro Insights
JD.com's financial health and market performance reflect a mix of strategic strengths and challenges. According to real-time data from InvestingPro, JD.com holds a market capitalization of $52.44 billion and maintains a P/E ratio of 15.33, which adjusts to a more attractive 12.67 when considering the last twelve months as of Q4 2023. The company's revenue growth over the same period was 3.67%, demonstrating a steady increase. Furthermore, the company's recent gross profit margin stood at 8.77%, which, while not the strongest in the sector, indicates some level of operational efficiency.
InvestingPro Tips highlight that JD.com currently holds more cash than debt, suggesting a stable financial position. Additionally, the company trades at a low revenue valuation multiple, which could indicate a potential undervaluation by the market. For investors looking for more in-depth analysis, there are 11 additional InvestingPro Tips available, providing a comprehensive look at JD.com's financial and market performance. To access these insights, consider using the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription at InvestingPro.
As BofA Securities projects optimism for JD.com's future, these InvestingPro metrics and tips provide a nuanced perspective on the company's current standing and potential investment value.
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