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Why Stock Gained Today

By Jeremy Bowman - May 20, 2021 at 4:51PM

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Bullish comments from analysts helped lift the Chinese e-commerce stock.

What happened

Shares of (JD 0.19%) gained for the second day in a row Thursday after it posted a strong first-quarter earnings report on Wednesday morning. The stock continued its rise as a number of analysts reaffirmed their buy ratings, growth stocks gained broadly, and's health division announced a new partnership in cancer management.

The stock closed the session up 4.4%.

JD CEO Richard Liu delivering packages

Image source:

So what, China's biggest direct online retailer, continued to grow briskly in the first quarter. Its revenue rose by 39% to $31 billion, ahead of estimates for a top-line result of $29.8 billion, while adjusted earnings per share increased from $0.32 to $0.38, topping expectations for EPS of $0.35. Annual active customers on its platform also increased by 29% to 500 million. 

On Thursday, several analysts applauded the results, though they also lowered their price targets to reflect the stock's pullback in recent months. HSBC's Cleo Zhang lowered her price target from $98 to $89, but said's sustainable and profitable growth was being underappreciated at its current share price. Meanwhile, Benchmark analyst Fawne Jiang lowered her price target from $122 to $112 to account for higher investment spending this year, but said she sees ample opportunity for margin expansion over the long term.

Also on Thursday morning, Genetron, a Chinese precision oncology platform, said it would partner with JD Health to create new cancer management solutions, starting with lung and liver cancer.

Now what has been a reliable high-growth stock throughout its history, and there are no signs of that changing anytime soon. The company continues to invest in its fast-growing services businesses like logistics and its third-party marketplace, which are currently unprofitable, but should eventually generate solid profit margins.

That bodes well for the company's long-term profitability, and shares are already modestly valued at a price-to-earnings ratio of 44.

HSBC Holdings is an advertising partner of The Ascent, a Motley Fool company. Jeremy Bowman owns shares of The Motley Fool owns shares of and recommends The Motley Fool recommends HSBC Holdings. The Motley Fool has a disclosure policy.

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