JD.com (NASDAQ:JD) has faced setbacks but is starting to look like a comeback candidate in 2024. Maybe you’re reluctant to invest in JD.com because the shares are in a long-term downtrend or because the company is in a country with economic challenges. Yet, I am bullish on JD stock as it’s starting to perk up, and the company’s new announcements suggest that JD.com is doing better than you might expect.
Based in China, JD.com is an e-commerce and retail-as-a-service company that’s similar to, but not as big as, Alibaba (NYSE:BABA). Also, like Alibaba, JD.com offers cloud-computing services. There’s even a recent cloud-computing price war going on between Alibaba and JD.com.
Speaking of Alibaba, that company announced a stock repurchase program not long ago. So, is JD.com willing to make a similar move? JD stock investors will be glad to discover that the company respects its shareholders and, according to the data, is growing in important ways.
Is JD.com a “Show-Me Story”?
As we’ll discuss soon, analysts are moderately optimistic about JD.com in general. However, there’s disagreement and some skepticism among individual analysts. For example, Mizuho analyst James Lee cut his JD.com price target from $35 to $32. Citing competition-related concerns (from Alibaba, I assume) and economic uncertainties with China’s macro environment remaining challenging, Lee called JD.com a “show-me story.”
I actually agree with Lee’s concerns. Frankly, China’s economy has been unsteady since the onset of the COVID-19 pandemic. Furthermore, China’s regulators have been known to crack down on technology-related companies.
Besides, Lee isn’t entirely pessimistic. He reiterated his Buy rating on JD stock, and his $32 price target implies a decent amount of share-price upside.
For what it’s worth, China is targeting ambitious gross domestic product (GDP) growth of around 5% this year. If this objective is met, JD.com could get a nice revenue boost from a pickup in economic activity.
As opposed to a “show-me story,” Morgan Stanley (NYSE:MS) analysts described JD.com as a “Catalyst Driven Idea” prior to the company’s March 6 financial report. So, did JD.com deliver the catalyst that the Morgan Stanley analysts were looking for?
JD.com Delights Investors with Results and Buybacks
Earlier, I asked whether JD.com would follow Alibaba by announcing a share-repurchase program. On that topic, JD.com delivered a positive surprise along with the company’s fourth-quarter 2023 financial results.
JD stock has been on an overall decline over the past year, but it perked up yesterday after the company published a press release. In a display of respect for the company’s shareholders, JD.com announced an annual dividend of $0.76 per American Depositary Share (ADS), as well as an upsized stock-repurchase program of up to $3 billion.
Stock traders jumped for joy at these disclosures, sending the JD.com share price higher yesterday. However, there were also a number of financial data points to celebrate.
Clearly, the Morgan Stanley analysts were spot-on when they named JD.com as a “Catalyst Driven Idea.” The buyback program announcement is definitely a positive catalyst, and so is JD.com’s earnings beat. Specifically, the company earned 5.3 Chinese yuan (74 cents) per share in Q4 of 2023, versus the 4.69 yuan per share that analysts had expected.
Meanwhile, JD.com reported quarterly revenue of 306 billion yuan ($42.5 billion), beating the analyst consensus estimate of less than 300 billion yuan. To a certain extent, these positive results can be attributed to JD.com’s focus on what CEO Sandy Xu called “price competitiveness.”
What does “price competitiveness” mean? As Bloomberg explained, JD.com is “offering consumers a wider choice of prices and product categories.” That’s a smart move during a time when some of China’s consumers may be struggling to make ends meet.
Sure, offering affordable product options could, in theory, dent JD.com’s bottom line. Yet, just take a look at JD.com’s aforementioned quarterly results. In this case, it appears that JD.com’s product-pricing strategy might actually be working.
Is JD Stock a Buy, According to Analysts?
On TipRanks, JD comes in as a Moderate Buy based on six Buys and four Hold ratings assigned by analysts in the past three months. The average JD.com price target is $38.20, implying 59.3% upside potential.
If you’re wondering which analyst you should follow if you want to buy and sell JD stock, the most profitable analyst covering the stock (on a one-year timeframe) is Jialong Shi of Nomura, with an average return of 16.21% per rating. Click on the image below to learn more.
Conclusion: Should You Consider JD Stock?
In the coming days, analysts might raise their price targets and upgrade their ratings on JD.com. Surely, they’ll notice that JD.com’s quarterly results are impressive, given China’s challenging economic landscape.
Moreover, they’ll see that JD.com shows respect for the company’s shareholders through dividend payments and stock buybacks. Over the coming quarters, JD.com’s product-pricing strategy could continue to benefit the company’s top-line results. Consequently, JD stock looks like a prime international stock pick, and I am certainly considering it for a buy-and-hold position.
