Citi maintains Buy on JD.com stock with $56 target

On Monday, Citi reiterated its Buy rating on JD.com, Inc (NASDAQ:JD) with a steady price target of $56.00. The company, currently trading at an attractive P/E ratio of 11.85x and maintaining a "GREAT" financial health score according to InvestingPro, has caught analysts’ attention. Citi’s analyst Alicia Yap highlighted the recent investor calls with JD.com’s IR Director, Mr. Sean Zhang, where several key topics were discussed. These included the first quarter and full-year outlook for 2025, growth drivers, category performance, user engagement, investment strategies, and shareholder returns.

The discussions revealed that despite JD.com’s strong fourth-quarter results for 2024 and a positive outlook for 2025, the company’s shares have not performed as well as expected. This underperformance is attributed to the company’s guidance for stable margins rather than an expansion, which seems to have concerned investors. While the company’s gross profit margin stands at 9.79%, InvestingPro analysis suggests the stock is currently undervalued, with 12 additional exclusive insights available to subscribers.

Citi noted that JD.com had provided conservative guidance at the beginning of the previous year but concluded 2024 with a 36% year-over-year profit growth. The company plans to deploy a significant $5 billion in share buybacks, signaling confidence in its long-term growth strategy for both revenue and profit.

The investment firm’s stance is that any further weakness in JD.com’s share price presents a more attractive buying opportunity. Citi’s endorsement of the stock remains firm, with a maintained Buy rating and a price target that suggests confidence in the company’s future performance.

In other recent news, JD.com has reported strong financial results for the fourth quarter, with a notable revenue increase of 13.4% year-over-year, reaching RMB 347 billion. Analysts from Bernstein, Benchmark, Mizuho (NYSE:MFG), Citi, and Jefferies have responded positively to these results, each raising their price targets for the company. Bernstein set a new target of $54, Benchmark increased theirs to $58, Mizuho adjusted to $50, Citi raised it to $56, and Jefferies set a target of $64. The upgrades reflect confidence in JD.com’s robust performance and strategic initiatives, particularly its trade-in program and growth in electronics and home appliances.

JD.com’s non-GAAP net profit also showed significant growth, with a 34% year-over-year increase to RMB 11.3 billion, surpassing expectations. The company has attributed part of this success to government-supported programs and enhancements in core categories. Analysts have noted JD.com’s strategic focus on expanding its customer base, especially in lower-tier markets, and its efforts to improve customer retention and competitiveness.

Looking ahead, JD.com forecasts high single-digit growth in revenue and net profit for 2025, with continued expansion in its user base and product categories. Citi and Benchmark have expressed optimism about JD.com’s growth prospects, citing strong demand in smartphones, computers, and appliances. Additionally, JD.com is considering expanding into food delivery services as part of its strategy to enhance its retail offerings. These developments suggest that JD.com is well-positioned to maintain its growth trajectory and strengthen its market position.

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