JD.com Lifted to Buy at Mizuho on Potential for Essential-Goods Sales

Mizuho analysts lifted JD.com shares to buy, citing opportunities in online pharmacy and other essential goods during the pandemic.
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Shares of JD.com  (JD) - Get Report rose after Mizuho Securities raised its rating on the Chinese e-commerce giant to buy from neutral.

Mizuho analysts also raised their price target for the stock to $58 from $37.

They acted because of JD.com’s “significant opportunities in online pharmacy” and other essential goods during the coronavirus pandemic, the analysts wrote in a commentary cited by Bloomberg.

The total addressable market “for both segments is substantial” and has small online penetration so far.

“JD is well positioned due to its logistics capability, partnerships with offline retailers,” and agreements with brands “that increase the speed and efficiency of delivery,” the analysts said.

Knowledgeable sources told Bloomberg last month that JD.com filed confidentially for a second listing in Hong Kong. It now trades on the Nasdaq.

The Hong Kong listing would give it access to the city’s stock market for capital and match competitor Alibaba Group’s  (BABA) - Get Report double listing.

JD.com’s Hong Kong listing could bring in at least $2 billion, sources told Bloomberg and The Wall Street Journal. JD.com’s Nasdaq market capitalization is now $69 billion.

Morningstar analyst Chelsey Tam puts JD.com’s fair value at $55.

“We like JD as it has delivered its promise of margin improvement, achieved its first annual profit, demonstrated the reliability of its direct sales business and self-owned logistics arm amid the covid-19 outbreak, recorded 55% higher new annual customers,” she wrote in a March commentary.

JD.com is expected to report earnings on Friday. Its American depositary receipts at last check stood at $48.50, up 3.1%. They have climbed 13% over the past three months.