Goldman Adds JD.com To Conviction Buy List, Lifts PT After 2Q Earnings

Goldman Sachs put JD.com stock onto its Conviction Buy list and raised the price target to $85 (26.9% upside potential) from $73, following this week’s 2Q results. Shares of JD.com are rising over 2% in pre-market trading on Tuesday after jumping 7.9% on Monday.

Goldman Sachs analyst Ronald Keung believes that JD.com’s (JD) “strong” 2Q results should sustain the stock’s rally as the retail scale is expanding from discretionary to staple goods. Keung points to the company’s visible margin expansion and finds the valuation of its subsidiaries attractive saying that JD Health, JD Logistics and JD Digits have become “more viable”.

In addition, Macquarie analyst Wendy Huang raised JD stock to Buy from Hold on Aug. 17.

On Monday , the China-based e-commerce company reported adjusted earnings of 3.51 yuan ($0.50) per ADS [American depositary shares] beating analysts’ expectations of 2.71 yuan per ADS. Revenues rose 33.8% year-over-year to 201.1 billion yuan ($28.5 billion), surpassing Street estimates of 190.8 billion yuan. Annual active customer accounts grew 29.9% year-over-year to 417.4 million in 2Q, while mobile daily active users grew 40% year-over-year.

JD.com’s CFO Sandy Xu stated that “Our scale advantages and cost efficiency enabled us to provide attractive prices during our June 18 sales promotions, benefiting consumers and society as China’s economy emerges from the difficult pandemic period, and helped drive solid top and bottom line results for the second quarter.”

Currently, the Street has a bullish outlook on the stock. The Strong Buy analyst consensus is based on 15 Buys versus 1 Hold. The average price target of $70.64 implies upside potential of about 5.5%. (See JD stock analysis on TipRanks).