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On Monday, Jefferies updated its outlook on JD (NASDAQ:JD) Health International Inc (6618:HK) stock, reducing the price target to HK$32.00 from the previous HK$40.00 yet still recommending a Buy rating.
The firm anticipates that the company will experience a revenue increase of 10-15% year-over-year in the second half of 2024. This forecast follows a period of high revenue base in November and December 2023 due to a spike in respiratory diseases.
The growth is expected to be driven by approximately 20% year-over-year increase in pharmaceutical sales, double-digit growth in nutraceuticals, and single-digit growth in medical devices. JD Health also expects to either improve or maintain its net margin compared to the second half of 2023.
The company plans to continue leveraging its bargaining power to reduce costs of goods sold (COGS) while investing in its platform to enhance quality and user retention.
JD Health's strategy focuses on gaining market share as its primary goal, with sustaining or improving margins as a secondary objective. The company has identified several potential areas for future upside, including the possibility of the National Drug Reimbursement List (NDRL) covering business-to-consumer (B2C) transactions, potential mergers and acquisitions (M&A) both online and offline, and the prospect of issuing dividends.
Management has noted that finance income has benefited from improved cash flow, although it acknowledges that future interest rates are difficult to predict. This financial perspective comes as JD Health continues to expand and solidify its presence in the healthcare market.
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