BofA 'Cautiously Optimistic' On JD.com

JD.com Inc JD indicated that it has seen some improvement in its logistics and supply chain capacity in the recent week, while experiencing some sequential recovery and pent-up demand, according to BofA Securities.

The JD.com Analyst: Eddie Leung maintained a Buy rating for JD.com, while keeping the price target unchanged at $76.

The JD.com Thesis: While the logistics capacity in Shanghai has rebounded to a large extent, the disruptions in other major cities had not been significant, Leung said in the note.

“The company expects full capacity during the Jun promotion,” he added.

“It expects the product mix to change from supermarket products and, to a lesser extent, PC devices, to discretionary categories like apparel. It also expects demand for home appliances to be broadly resilient, as there are fewer delays in installation and local consumption subsidies in certain large cities such as Guangzhou and Shenzhen,” the analyst wrote.

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The is optimism, albeit cautious, with increased uncertainty in the pace of recovery compared to the one seen in 2020, Leung mentioned. “The product mix change, along with efficiency measures, should help margin in 2H22 and hence we keep our assumption of margin improvement in 2022 and retain Buy on reducing logistics bottlenecks and ongoing efficiency measures,” he added.

JD Price Action: Shares of JD.com are down 1.04% to $55.54 at the time of publication Wednesday, according to Benzinga Pro.

Photo: Courtesy of Daniel Cukier on Flickr