JD.com could get a boost with earnings in details on subsidy plan, MS says
By Liz Moyer
Investing.com -- JD.com Inc Adr (NASDAQ: JD ) shares could get a 5% to 10% bump after the Chinese e-commerce company provides more information on its planned subsidies to better compete with rivals, according to analysts at Morgan Stanley.
In a research note on Wednesday, the analysts gave a 60% probability of such a stock move when JD.com reports earnings on March 9.
JD is offering subsidies, called the 10 billion renminbi plan ($1.44 billion), for merchants on its platform as its price war with Pinduoduo heats up. Morgan Stanley notes that JD.com’s shares have lagged rivals Alibaba Group Holdings Ltd ADR (NYSE: BABA ) and PDD Holdings Inc DRC (NASDAQ: PDD ) in trading this year. As of Wednesday, JD.com’s shares were down 18% year to date, versus a 2.3% gain for Alibaba and a 11.9% gain for PDD.
Shares of JD.com rose 2.7% on Wednesday.
The analysts note investors might be worried about the cost of the subsidy plan. “However, we think the market may have overestimated the incremental expense related to the Rmb10bn subsidy. We think management's comments on less than expected expense related to the Rmb10bn subsidy, hence better-than-expected 2023 margin guidance, could drive JD's share price higher,” they wrote.
Morgan Stanley rates JD.com stock as overweight with a price target of $74. At current levels, the target assumes more than 60% upside.
Add Chart to Comment
We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:
- Enrich the conversation
- Stay focused and on track. Only post material that’s relevant to the topic being discussed.
- Be respectful. Even negative opinions can be framed positively and diplomatically.
- Use standard writing style. Include punctuation and upper and lower cases.
- NOTE: Spam and/or promotional messages and links within a comment will be removed
- Avoid profanity, slander or personal attacks directed at an author or another user.
- Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
- Only English comments will be allowed.
Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.
Drop an image here or Supported formats: *.jpg, *.png, *.gif up to 5mb
Drop an image here or