On Tuesday, Citi reaffirmed its Buy rating and $18.00 stock price target for Vipshop Holdings (NYSE:VIPS) following the company's third-quarter earnings report. The results were consistent with expectations, with total net revenues decreasing by 9% year-over-year to RMB 20.7 billion, which was at the lower end of the projected guidance range of RMB 20.5-21.6 billion. The figures aligned with both Citi's and the consensus estimates of RMB 20.6 billion.
Vipshop's active customer count saw a 6% year-over-year decrease, settling at 39.6 million, while the total number of orders declined by 8.9% year-over-year to 163.9 million. The company's total Gross Merchandise Volume (GMV) also experienced a year-over-year decrease of 5.6%, amounting to RMB 40.1 billion.
The non-GAAP net income dropped by 29% year-over-year to RMB 1.3 billion, which was slightly ahead of Citi's estimate of RMB 1.27 billion and in line with the consensus of RMB 1.32 billion. This performance was attributed to a marginally higher Gross Profit Margin (GpM) and lower-than-anticipated Sales & Marketing (S&M) and Research & Development (R&D) expenses, which were partially offset by increased fulfillment and General & Administrative (G&A) expenses.
Looking ahead, Vipshop provided revenue guidance for the fourth quarter of 2024, forecasting revenues to be in the range of RMB 31.2-32.9 billion, which represents a decline of 10% to 5% year-over-year. The mid-point of this guidance is 0.5% below the RMB 32.2 billion anticipated by both Citi and the consensus, which is viewed as an inline guidance by the analyst.
In other recent news, Vipshop Holdings experienced several crucial developments. Barclays (LON:BARC) initiated coverage on Vipshop with an Overweight rating, citing confidence in the company's ability to maintain profitability and achieve modest growth.
Meanwhile, Citi raised its stock target for Vipshop to $18.00, maintaining a Buy rating despite predicting a decrease in third-quarter revenues. However, HSBC reduced its price target for Vipshop to $14.20, maintaining a Hold rating due to anticipated challenges in consumer demand.
JPMorgan reaffirmed its Overweight rating on Vipshop, suggesting limited downside risk for the stock's price based on its current valuation. CLSA downgraded Vipshop's stock from Outperform to Hold, adjusting the price target to $12 from the previous $15.80.
Vipshop's second-quarter 2024 performance showed a 3.6% year-over-year decrease in total revenue, amounting to $26.9 billion, and an adjusted net profit of Rmb2.2 billion. The company's third-quarter guidance suggests a further revenue decline of 5-10% year-over-year. In response to these financial figures, Vipshop announced a $1 billion share buyback program, demonstrating its commitment to shareholder value.
Finally, the company announced a change in its leadership, with Mike Li succeeding Tao Feng as the new Chief Technology Officer. These recent developments underline the dynamic and evolving landscape for Vipshop Holdings.
InvestingPro Insights
To complement Vipshop's recent earnings report and Citi's analysis, InvestingPro data offers additional insights into the company's financial health. Despite the reported revenue decline, Vipshop maintains a strong financial position with a P/E ratio of 5.96, significantly lower than many of its peers in the Broadline Retail industry. This low valuation multiple suggests that the stock may be undervalued relative to its earnings potential.
An InvestingPro Tip highlights that Vipshop holds more cash than debt on its balance sheet, indicating financial stability even in the face of challenging market conditions. This strong liquidity position could provide the company with flexibility to navigate the current downturn and potentially invest in growth opportunities.
Another relevant InvestingPro Tip notes that the stock's RSI suggests it is in oversold territory. This technical indicator, combined with the company's low P/E ratio and solid balance sheet, may present an interesting opportunity for value investors aligned with Citi's Buy rating.
For readers interested in a deeper analysis, InvestingPro offers 6 additional tips and a comprehensive set of financial metrics for Vipshop Holdings.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.