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Investing.com - UBS has reduced its price target on JD.com, Inc (NASDAQ:JD) to $50.00 from $58.00 while maintaining a Buy rating, citing increased investments in food delivery that the market has not fully accounted for. The stock, currently trading at $31.60, appears undervalued according to InvestingPro analysis, with a P/E ratio of just 8.06 and strong financial health metrics.
The investment bank estimates JD.com’s second-quarter food delivery investment at approximately Rmb10 billion, comparable to Alibaba (NYSE:BABA)’s spending, based on an estimated average daily order volume of 12-13 million and a unit economics loss of Rmb8-9 per order.
UBS expects JD.com to maintain a return-on-investment focus in its food delivery strategy, balancing stronger volume growth in the seasonally stronger third quarter while optimizing unit economics, with industry checks indicating the company has been modifying and targeting customer subsidies more precisely.
The firm projects JD.com’s food delivery investments will reach Rmb14 billion in the third quarter before decreasing to Rmb11 billion in the fourth quarter of 2025, totaling Rmb35 billion for 2025 compared to Alibaba’s estimated Rmb50 billion.
UBS has identified positive early indicators in traffic growth, particularly in beverages appealing to female users and those in lower-tier cities, noting that according to QM data, JD experienced the most rapid growth in daily active users and monthly active users among Chinese e-commerce operators in the second quarter.
In other recent news, JD.com has reported strong financial results for the first quarter of 2025, with revenue and net income exceeding expectations. The company saw a 17% year-over-year increase in sales of electronics and home appliances and a 15% rise in general merchandise sales. JD.com has also increased its full-year 2025 guidance for its JD Retail division, anticipating double-digit growth in both revenue and net profit. Following these results, several firms have adjusted their price targets for JD.com. Benchmark lowered its price target from $58 to $53 while maintaining a Buy rating, citing JD.com’s sustained momentum. Mizuho (NYSE:MFG) also reduced its price target to $48 from $50, retaining an Outperform rating, and noted the company’s strong user growth and revenue gains. Meanwhile, Citi increased its price target to $52 from $51, reaffirming a Buy rating due to JD.com’s impressive net profit growth. Susquehanna, however, lowered its price target to $40 from $45, maintaining a Neutral rating, due to ongoing macroeconomic uncertainties. These developments reflect a mixed but generally positive outlook for JD.com among analysts.
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