JD.Com Inc JD shares were trading higher Wednesday after Mizuho Securities upgraded the company's stock due to "significant opportunities in online sales" as more people turn to retail pharmacy.
The JD.com Analyst
James Lee upgraded JD.com from Neutral to Buy and raised its price target from $37 to $58 based on significant opportunities in online pharmacy triggered by the COVID-19 pandemic.
The JD.com Thesis
The deregulation and government reform of retail pharmacy will push medicine sales from hospitals or clinics to retail stores, presenting a significant opportunity for online sales, Lee said in a Tuesday upgrade note. (See his track record here.)
“Due to regulatory tailwinds, we believe that online retail pharmacy penetration will increase from estimated 5% now to 20% in five years, delivering a market size of nearly RMB 500billion,” the analyst said.
Another major factor is the recent lockdowns triggered by the coronavirus pandemic, as consumers have been forced to adjust their behavior toward online shopping, he said.
“We believe JD.com is well positioned because it offers tele-medicine for prescriptions, guarantees to reduce the risks of fake products, and logistics services to ensure timely delivery.”
Lee said he expects JD.com to capture 20% of the online pharmacy market share by fiscal year 2022.
JD Price Action
JD.com was trading 1.35% higher at $47.66 at the time of publication Wednesday. The stock has a 52-week high of $49.13 and a 52-week low of $25.48.
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