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Investing.com -- Jefferies cut its price targets for Alibaba (NYSE:BABA), Meituan and JD.com but maintained Buy ratings, saying the companies remain well positioned despite rising spending on food delivery and other services.
The broker said Chinese internet firms are racing to build one-stop apps offering shopping, travel, food and entertainment.
It sees entertainment platforms as the most defensive segment heading into the second half, with online travel and ecommerce players also expected to benefit from steady demand.
Jefferies lowered its price target on Alibaba, to $153 from $156, citing increased investment in food delivery and logistics.
The firm said Alibaba’s on-demand services, including Eleme and Taobao Instant Commerce, handled over 60 million daily orders in late June, nearly double from a year earlier, and could help drive user growth and engagement.
Meituan, which Jefferies said handled over 100 million customers during China’s mid-year shopping festival, was also kept at Buy.
Its price target was reduced to HK$165 from HK$185 due to higher investment in its grocery and 30-minute delivery businesses.
JD.com was described as making early gains in food delivery, helping draw more young and female users to its app.
But Jefferies warned that the business remains in its early stages and may pressure near-term earnings. The price target was cut to $60 from $66.
In online travel, Jefferies said Trip.com remains the clear leader, helped by its focus on mid-to-high-end hotels and bundled services. It expects new competition from JD to be limited.
The broker also highlighted Kuaishou and Bilibili (NASDAQ:BILI) as standouts in entertainment, calling the segment its top pick for the second half thanks to steady ad revenue and lower exposure to macro headwinds.