Here’s Why Pacific Crest is Mega-Bullish on JD.Com Inc (ADR) (JD)

What:

JD.Com Inc(ADR) (NASDAQ:JD) is trending after analysts at Pacific Crest went mega-bullish on the stock, initiating an ‘Overweight’ target and setting a $40 target price. Specifically, analyst Hans Chung thinks that the equity could rally almost 33% in twelve months on the back of margin expansion and a potential spin-off of JD Finance. Pacific Crest also likes how JD has ‘best-in-class logistics‘ and over 220 million customers. Not surprisingly, shares of JD.Com Inc (ADR) (NASDAQ:JD) are in the green, rallying over 1% in morning trading.

Why:

Although investors normally think of Alibaba Group Holding Ltd (NYSE:BABA) when it comes to the e-commerce market, JD.Com Inc(ADR) (NASDAQ:JD) is a strong second. With its 220 million customers and its alliance with Wal-Mart Stores Inc (NYSE:WMT), among others, JD.com has the financial and technical strength to compete in arguably the world’s most important e-commerce market. Given that the Chinese economy is still expected to expand over the decade, JD.com has a lot of growth ahead of it that could potentially unlock a lot of shareholder value. Today’s analyst upgrade is an acknowledgement of JD.Com Inc (ADR) (NASDAQ:JD)’s potential and of potentially upcoming catalysts such as a potential finance spin-off.

What does Smart Money Sentiment Say?

According to our data, the smart money is also bullish on JD.com. Of the 742 elite funds in our database, 48 were long JD.Com Inc(ADR) (NASDAQ:JD) at the end of December, up 4 funds from the previous quarter.

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What Next:

With President Trump slated to meet with Chinese President Xi Jinping soon, we think the U.S. and Chinese relationship will remain stable to positive for the time being. Throw in the current bull market, and JD.Com Inc(ADR) (NASDAQ:JD)’s short term prospects look decent. In the long run, management will need to execute and hold its own against Alibaba to deliver value.

Disclosure:None