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U.S. listed shares of Chinese e-commerce giant JD.com (JD) fell for a second consecutive day Friday, as a host of analysts lowered their expectations for JD stock.
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At least 10 Wall Street analysts have lowered their price targets for JD.com in the past week, according to FactSet. Also, analysts at Morgan Stanley on Friday downgraded JD stock to equal weight from overweight.
On the stock market today, U.S.-listed shares for JD closed down 2.8% at 27.05. Further, JD stock fell 8% in trading Thursday.
Consumer Concerns
Citi, Jefferies, Benchmark and Daiwa Securities were among the firms to lower target prices for JD stock. The aggregate price target for JD stock has fallen to 48, compared to 51 last month and 82 at the start of the year, according to FactSet. Consensus revenue estimates from analysts for JD’s third-quarter have edged down by 1.4% this month, to $34.3 billion, according FactSet.
JD is among China’s largest e-commerce companies, competing with Alibaba (BABA)and PDD Holdings (BABA). The company also provides supply-chain technology and services.
JD stock has been hit by broader concerns about China’s economy, the world’s second-largest. Consumer prices were unexpectedly flat in September after a rebounding August. That could point to weaker consumer spending.
Citi analysts maintained a buy rating for JD.com but lowered its price target to 43 from 64. The Citi report cited a “relatively muted consumption trend, high base, intense competition, and ongoing impact from restructuring adjustment” for the change in its estimates, as quoted in Reuters.
JD stock, as well as BABA shares, climbed earlier this week on reports that China would consider further stimulus. But JD stock is nonetheless down by more than 50% this year.
BABA stock was up by 0.5% in recent trading action Friday. PDD is down about 1%.
JD Stock: Falling Despite Strong Earnings Rating
The macro concerns have drowned out earnings growth for JD. That is seen clearly in JD stock’s IBD EPS Rating. The company scores 98 out of 99 on that metric, according to IBD Stock Checkup. The metric measures the growth and stability of a company’s earnings over the past three years, with extra weighting put on the most recent two quarters.
In August, JD reported adjusted earnings of 74 cents per share on net revenue of $39.7 billion for its quarter ending in June. That topped analysts expectations of 68 cents a share earnings and revenue of $38.6 billion.
But quarterly revenue growth has slowed this year into the single digits. JD is best-known for selling higher-end products such as electronics and home appliances. But the company has focused part of its strategy of late on appealing to customers by lowering costs. That includes a $1.5 billion discount campaign launched in the spring to better compete with PDD Holdings, which operates the popular low-cost shopping apps Pinduoduo and Temu.
Further, JD is expected to report third-quarter earnings in mid-November. That would come after Singles’ Day, China’s best-known annual shopping event.
Yet the company’s IBD Relative Strength rating is a dismal 12 out of 99, meaning it is performing worse than 88% of all stocks in IBD’s database.
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