Uncertainty Ahead for JD.com, Says Morgan Stanley

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Uncertainty Ahead for JD.com, Says Morgan Stanley

By Sam Boughedda

Investing.com -- Morgan Stanley analyst Eddy Wang reiterated an Overweight rating and $80 price target on Chinese e-commerce company JD.com Inc (NASDAQ: JD ) Wednesday but told investors there is uncertainty ahead. 

Wang stated the company posted solid first-quarter results , but Omicron and Covid-related lockdowns are negatively impacting revenue growth.

The company topped revenue estimates but reported its slowest quarterly revenue growth on record on Tuesday.

"We forecast JD's revenue to grow 6% YoY in 2Q22 amid the uncertain Covid situation and rolling lockdowns. With online retail sales of goods in China dropping 5.2% yoy in April, according to NBS, we expect JD's revenue to record a YoY decline in April given its higher exposure to 1st-tier cities (i.e. BJ, SH, GZ, SZ) that experienced lockdowns in April," wrote Wang. 

He added that despite a gradual JD revenue recovery starting from May, there is still uncertainty given the evolving Omicron situation. 

The analyst also pointed to China's 618 e-commerce shopping festival, explaining that although management highlighted merchants are more proactive about participating in the promotion compared to previous years, the high base in 2021 618 sales, along with potentially weak consumer sentiment, could lead to slowing revenue growth in the second quarter.

JD.com ADRs are down 4.9%.

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