Farfetch Launches On JD.com, Analysts Bullish On China Prospects

Farfetch Ltd FTCH has announced the launch of its business on JD.Com Inc JD in China about six months ahead of schedule.  

The Analysts

Wells Fargo’s Ike Boruchow maintained an Outperform rating on Farfetch with an unchanged $32 price target.

Bank of America Merrill Lynch's Geoffroy de Mendez maintained a Buy rating and $31 price target.

The Thesis

The earlier-than-scheduled launch on JD.com means that Farfetch will be able to reap the potential rewards of the partnership earlier than anticipated, Wells Fargo’s Boruchow said in a Tuesday note.

The company will have “Level 1” access to around 3 million users who are considered “prequalified” luxury customers, the analyst said. 

China represents Farfetch’s “most compelling long-term opportunity,” as the GMV potential could grow from $200 million today to an estimated $6 billion by 2025, he said. 

BofA's Mendez said Farfetch will benefit from JD’s logistics network.

The JD.com launch completes Farfetch’s turnkey offering for luxury brands wishing to target mainland China, a region that is expected to drive 75% of Chinese luxury spending growth by 2025, the analyst said. 

“This is an entirely new channel with a large existing customer base for Farfetch,” Mendez said, estimating GMV growth of 46% in the back half of 2019.

Price Action

Farfetch shares were up 0.38%  at $21.08 at the close Wednesday. 

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