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.
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.