Baidu And JD.com Will Gain Market Share Amid Regulatory And Macro Headwinds, Analyst Says

Mizuho analyst James Lee expects the recovery curve in 2H22 to slow for China Internet, given the rising COVID cases and mobility restrictions impacting consumer sentiment and business activities.
The headwind would reflect across all internet segments, including e-commerce, advertising, and cloud computing.
Although the economy should recover from the 2Q22 trough, a potential moderation to the Zero-COVID policy would improve the speed of recovery and investor sentiment.
With the conclusion of the 20th National Congress, Lee expects a focus on consumption support for strategic industries with a gradual exit from Zero-COVID.
Lee maintained JD.com, Inc JD and Baidu, Inc BIDU as top picks. Lee anticipated both companies to be market-share gainers from regulatory policies and the competitive environment.
Lee maintained Buy on Baidu cutting the price target from $275 to $200.
Lee reiterated Buy on JD.com, slashing the price target from $90 to $82.
The price target cuts reflected macro headwinds and compression of group multiples.
Price Action: JD shares traded higher by 3.96% at $50.87 on the last check Monday. BIDU shares traded higher by 3.21% at $92.33.

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