UPDATE: Morgan Stanley Downgrades JD.com (JD) to Equalweight
Morgan Stanley downgraded JD.com, Inc (NASDAQ: JD) from Overweight to Equalweight with a price target of $35.00 (from $41.00). Analyst Robert Lin remains positive long-term but noted he near-term competition is expected to increase, and he sees better value elsewhere.
"JD noted its 3P logistics business was profitable in 2Q given high utilization. As a result, JD is considering lowering delivery charges on merchants; a step we believe will coincide with competitors' recent focus to compete for brand resources and the likely impact on 3P GMV growth. Potential lowering of commission rate for key brands by major 3P platforms could trigger some margin pressure near-term, we believe," said Lin.
"We adjust down non-gaap earnings to Rmb327mn and Rmb1,556mn for 2015 and 2016, respectively, mainly due to higher marketing spend and elimination of deferred revenue from cooperation with Bitauto. Our new PT of US$35 is down 15% from our previous PT of US$41 mainly driven by slower 3P GMV growth due to increasing competition expectation and macro slowdown. We believe these issues could weigh on sentiment in 2H15. We remain positive on JD.com's long-term fundamentals and see share price upside, but other players (i.e. Alibaba, Vipshop and Jumei) present better value, in our view . We would become more positive if competition does not materialize and investments in new initiatives prove lower than expected," added the analyst.
For an analyst ratings summary and ratings history on JD.com, Inc click here. For more ratings news on JD.com, Inc click here.
Shares of JD.com, Inc closed at $32.07 yesterday.