NEW YORK (TheStreet) -- Deutsche Bank initiated coverage of JD.com Inc.(JD) - Get Report with a "hold" rating and a price target of $26.60.

The bank said the rating of the Chinese online direct sales company was based on fair valuation.

"We expect JD.com, as a leading ecommerce platform in China, to continue to gain market share by leveraging its fully-integrated fulfillment infrastructure and in-house delivery service," analysts said, adding, "We expect margins to improve gradually thanks to category expansion toward higher margin non-3C products and marketplace growth."

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Additionally, "JD's partnership with Tencent Holdings Ltd  (TCTZF)     should provide potential mobile upside," analysts said, concluding, "We remain cautious on profitability given heavy capital expenditure and aggressive efforts around lower tier market penetration."

JD.com is the largest online direct sales company in China in terms of transaction volume with a market share in China of 54.3% in the second quarter of 2014, according to iResearch, a third-party market research firm.

Shares of JD.com are down 0.79% to $23.91.

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