Apart from being one of the favorite picks of legendary investor Michael Burry, e-commerce giant JD.com (NASDAQ: JD) delivered strong Q2 earnings on August 15, prompting positive reactions from analysts, with JPMorgan analyst Andre Chang calling it “too cheap to ignore.”
In an analysis released on June 16, Chang upgraded JD stock to an “overweight” rating, raising its price target from $33 to $36; the analyst believes JD’s recent strategy adjustments and low valuation make it likely to outperform in the next 6 to 12 months, with a potential upside of over 30%. The new target is based on an 8x 2025E P/E ratio, further supporting Chang’s view that the stock is undervalued.
Chang noted, ‘We believe JD’s strategy adjustment and valuation have reached an inflection point, leading us to upgrade it to Overweight with a new June 2025 price target of $36.”
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JPMorgan forecast for JD stock
The August 15 report revealed a mixed beat on estimates. Earnings per share (EPS) of ¥9.36 ($0.063) significantly exceeded the estimated ¥6.24 ($0.042) and marked a 73.7% increase year-over-year (YoY).
Revenue came in at ¥291.4 billion ($19.705 billion), up 1.2% YoY, though slightly below the expected ¥291.47 billion ($19.709 billion).
Chang’s team forecasts JD’s revenue growth to improve to 3-4% YoY in the second half of 2024,, up from 1% in Q2 2024, driven by stronger margins and a shift away from aggressive pricing.
The report also notes that while JD’s forward P/E is unlikely to exceed 10x, the current valuation at 6.5x/6x 2024/25E P/E is near the low end of its peers, which the analysts consider an undervaluation.
Analysts at JPMorgan have raised their 2024/25E EPS estimates by 27% and 29%, respectively. Despite a cautious outlook on revenue growth and market share, analysts anticipate JD’s EPS will see double-digit growth in the coming quarters.
Michael Burry recently reduced his JD stock position
While being more “bullish on China than before,” Burry still decided to offload some of his JD stock holdings, as his most recent portfolio update shows.
During Q2, “The Big Short” investor sold 110,000 JD shares, worth a little over $3 million, which in return reduced its position to fifth place in his portfolio, at 12.31%.
Since Burry started his JD position in Q1 2019, JD stock has gained just a little over 1%, potentially motivating the Scion Asset Management founder to slightly trim his position and reinvest the profits into other holdings.
JD stock price chart
The previous trading session saw JD stock valued at $28.44 after a positive gain of 3.2%, after a strong performance in the last five trading days, during which JD shares added 10.20%.
Generally, analysts from TipRanks have an optimistic sentiment regarding JD stock, as they rate it as a “strong buy” based on 14 examinations. Of these, 12 advised a “buy,” while two recommended a “hold.”
The average price target reflects the overall bullishness of this stock, as it predicts a 43.14% upside from the current price levels for a $40.78 valuation in 12 months.
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