Nomura's recent research report suggests that JD.com (JD, Financial) is poised to significantly exceed market expectations in both revenue and earnings for the fourth quarter of the 2024 fiscal year. The report anticipates a 10% year-over-year increase in revenue and a 22% rise in non-GAAP earnings per share. These figures are about 4% and 20% higher, respectively, than the latest market forecasts, driven primarily by the company's "trade-in" subsidy program.
Nomura forecasts a 10% annual revenue growth in JD.com's electronics and general merchandise sectors. Due to strong operational leverage, JD's retail operating profit margin could climb by 0.7 percentage points to 3.3%, with an expected annual operating profit increase of 38%, outpacing the latest market consensus by 40%.
The report indicates that home appliances, 3C (computer, communication, and consumer electronics) products, and JD Supermarket are likely to lead this growth. The "trade-in" subsidy program is expected to significantly boost the performance of the home appliance and 3C categories in the fourth quarter.
Nomura has set JD.com's target price at $50 and maintains a "buy" rating for the stock.
