On Monday, Citi analysts adjusted their stance on Vipshop Holdings (NYSE:VIPS), downgrading the stock from Buy to Neutral, while maintaining a price target of $18.00. The decision comes ahead of the company’s first-quarter earnings report for 2025, scheduled for May 15. According to InvestingPro data, Vipshop currently trades at an attractive P/E ratio of 8x and maintains a "GREAT" financial health score of 3.19/5. Citi’s analysts predict that Vipshop’s sales for the first quarter will likely be at the lower end of the company’s guidance.
Vipshop management had previously indicated that revenue for the first quarter could be flat or down by as much as 5% year-over-year. This outlook was attributed to inconsistent weather and temperature changes impacting the demand for spring clothing in March. Citi has revised its revenue forecast for the first quarter down by 2.6%, expecting a 4.9% year-over-year decrease to Rmb26.3 billion, aligning with the lower end of Vipshop’s projected range of Rmb26.3-27.3 billion.
For the full year, Citi has also adjusted its expectations, now modeling revenues to be roughly flat year-over-year at Rmb108.5 billion. Non-GAAP net profit is anticipated to see a slight increase of 0.8% year-over-year to Rmb9.16 billion. Despite these revisions, Citi’s price target remains unchanged at $18.00, based on a steady 7x price-to-earnings ratio applied to the estimated 2026 earnings per share of $2.63.
The downgrade reflects Citi’s view that with an expected total return of less than 15% and no immediate catalysts on the horizon, Vipshop’s stock does not currently present a compelling buy opportunity. Consequently, the analysts have opted for a more cautious Neutral rating as the company heads into the latter half of the year, where it anticipates a return to revenue growth and an increase in active users.
In other recent news, Vipshop Holdings Limited reported its fourth-quarter 2024 earnings, exceeding analysts’ expectations with an earnings per share (EPS) of $5.70 against a forecast of $4.99. The company’s revenue also surpassed projections, reaching $33.2 billion compared to the anticipated $31.89 billion. Vipshop introduced over 1,500 new brands in 2024, while its apparel categories experienced a 2% year-over-year growth, contributing significantly to the company’s performance. Despite a slight decline in full-year revenues to RMB 108.4 billion from RMB 112.9 billion, the company achieved a gross margin of 23%, marking an eight-year high. The firm maintained a stable net margin of 8.3%, with a full-year non-GAAP net profit of RMB 9.0 billion. Vipshop provided revenue guidance for the first quarter of 2025, expecting between RMB 26.3 billion and RMB 27.6 billion, indicating a potential decrease of up to 5% year-over-year. The company plans to return less than 75% of its 2024 non-GAAP net income to shareholders, emphasizing its commitment to shareholder value. Additionally, Vipshop’s management discussed the exploration of AI applications in customer service and product recommendations to enhance operational efficiency.
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