JD.com Upgraded as Stifel Sees Multiple Growth Trends

JD.com has a 'multifaceted growth opportunity' in the years ahead, Stifel analyst Scott Devitt says, upgrading the online-retail stock.
Author:
Publish date:

JD.com  (JD) - Get Report shares soared Tuesday, after Stifel analyst Scott Devitt upgraded the online-retail colossus to buy from hold and lifted his share-price target to $105 from $84.

The Beijing company has a “multifaceted growth opportunity” in the years ahead, Devitt wrote in a commentary.

JD shares recently traded at $95.22, up 10%. They have well more than doubled over the last year.

The company benefits from "a number of secular growth trends to support healthy long-term growth and ongoing margin expansion,” Devitt said. These include accelerating increases of active consumer accounts and strong expansion in Chinese e-commerce.

To be sure, Morningstar analyst Dan Baker doesn’t share Devitt’s enthusiasm, putting fair value for JD at $73. 

“We believe there could be near-term pressure on JD’s share price,” he wrote in a November commentary after the company’s third-quarter earnings report.

“JD’s customer addition remained impressive..., marking the fourth consecutive quarter that JD has outperformed Alibaba  (BABA) - Get Report in this metric,” he said.

But “growth in transactions, with JD having a higher share of supermarket products and produce, is expected to slow, as activity in China normalizes post-pandemic restrictions,” Baker said.

“Regulatory scrutiny over e-commerce activity could add some risk, but we don't think this should impede JD’s ability to build its customer base. On the bright side, JD’s single-day sales were robust and should help sustain growth into the fourth quarter.”

In the big picture, “we have a no-moat rating on JD currently, but the gradual improvement in profitability augurs favorably for the firm's competitive advantage,” Baker wrote.