Vipshop To Buy Back $500M In Stock; Shares Pop 9%

Shares of Vipshop Holdings Limited jumped 8.6% to close at $30.93 on March 30 after the Chinese e-commerce company announced a stock repurchase program of up to $500 million, which it intends to fund from its current cash balance.

The repurchase program of Vipshop’s (VIPS) Class A ordinary shares will be completed over the two years from the date of commencement. Notably, one Class A share of Vipshop is equal to five American depositary shares (ADS).

The plan of adoption and implementation of the announced share repurchase program followed the applicable rules and requirements under the Securities Exchange Act of 1934, as amended, and the company’s insider trading policy. (See Vipshop stock analysis on TipRanks)

Last month, Vipshop reported 4Q results. The company’s adjusted earnings per ADS came in at $0.57 (RMB3.70) in 4Q, topping the consensus estimate of $0.49. Total net revenue was $5.5 billion (RMB35.8 billion) and outpaced analysts’ expectations of $5.4 billion.

On Feb. 26, Macquarie analyst Han Joon Kim lifted the stock’s price target to $52 (68% upside potential) from $33 and maintained a Buy rating after the company reported “another quarter of strong customer growth.”

The rest of the Street is cautiously optimistic about the stock with a Moderate Buy consensus rating. That’s based on 2 Buys versus 2 Holds. The average analyst price target of $41 implies 32.6% upside potential to current levels. Shares have surged 98.5% over the past year.

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