On Friday, Morgan Stanley maintained an Equalweight rating on JD (NASDAQ:JD).com, Inc shares (NASDAQ:JD) with a price target of $27.00. The firm anticipates that the upcoming fourth quarter 2023 earnings release on March 6 could serve as a catalyst for the stock price, depending on the company's guidance for the first quarter of 2024 and its full-year gross merchandise volume (GMV) and revenue growth and margin trends.
The analyst outlined three potential scenarios for JD.com's guidance. The first scenario, which is Morgan Stanley's base case with a 60% probability, suggests low single-digit percentage year-over-year (YoY) revenue growth for both JD Group and JD Retail (JDR) in the first quarter of 2024. It also includes guidance for high single-digit percentage YoY GMV and revenue growth for the full year of 2024, with flat net profit compared to 2023. Under this scenario, JD's share price is expected to move down by 0-5%.
The second scenario predicts mid-single-digit percentage YoY revenue growth for the first quarter of 2024 for both JD Group and JDR. It also anticipates high single-digit percentage YoY GMV and revenue growth for the full year, along with a year-over-year improvement in net margin for 2024. If this scenario occurs, the share price is expected to move up by 0-5%.
In the third scenario, the guidance is for low single-digit percentage YoY revenue growth for the first quarter of 2024 for both JD Group and JDR, with no comments on the full-year 2024 GMV/revenue growth or margin trend. This could lead to a decrease in JD's share price by 5-10%.
The performance of JD.com's stock following the earnings report will likely hinge on the company's forward-looking statements. Investors will be closely monitoring the release to see which scenario unfolds and how it aligns with Morgan Stanley's projections.
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