On Thursday, Citi reaffirmed its Buy rating on shares of JD.com, Inc. (NASDAQ:JD) with a steady price target of $41.00. The firm highlighted JD.com's aggressive share repurchase strategy, noting the company's completion of its latest $3 billion buyback program. This rapid utilization of allocated funds for repurchases reflects JD.com's strong commitment to shareholder returns.
JD.com has been active in repurchasing shares, having spent $2.1 billion from its 2020-21 buyback program as of March this year. The company then quickly exhausted its subsequent $3 billion repurchase authorization by August, signaling a proactive approach to managing its share capital.
With no remaining funds in its buyback programs, Citi anticipates that JD.com is likely to seek board approval for a new repurchase initiative ahead of its third-quarter 2024 earnings report.
The company's robust net cash balance of $20.2 billion, or $9.3 billion excluding subsidiary cash, along with its improving profitability, positions JD.com's stock as attractive in Citi's view. The expectation of a potential new buyback announcement has led Citi to initiate a 30-day positive Catalyst Watch, suggesting that such a development could bolster the company's share price in the near term.
Citi's analysis points to JD.com's financial health and its implications for future shareholder value. The firm's commentary underscores the e-commerce giant's ability to generate profit and manage its capital effectively, reinforcing the positive outlook for JD.com's stock.
In other recent news, Walmart (NYSE:WMT) has divested its entire stake in JD.com, valued at $3.74 billion, to concentrate on its operations in China. Despite this change, the two companies plan to maintain a commercial relationship. Following this development, various analyst firms have provided their insights.
Jefferies also kept its Buy rating with a $43.00 stock price target. On the other hand, Susquehanna held its Neutral rating on JD.com, citing ongoing macroeconomic uncertainties. JD.com recently reported a record non-GAAP net profit for Q2 2024 due to strategic cost reduction, efficiency improvements, and an enhanced user experience. These recent developments reflect the dynamic nature of JD.com's operations.
InvestingPro Insights
JD.com's commitment to shareholder returns is further supported by compelling financial metrics and analyst optimism. According to InvestingPro data, JD.com boasts a market capitalization of $39.56 billion and trades at an attractive P/E ratio of 9.79, with an adjusted P/E ratio for the last twelve months as of Q2 2024 at an even lower 7.45. This low earnings multiple is complemented by a PEG ratio of 0.2, indicating potential undervaluation relative to its earnings growth.
InvestingPro Tips highlight that JD.com holds more cash than debt on its balance sheet, an encouraging sign of financial stability. Moreover, 10 analysts have revised their earnings upwards for the upcoming period, suggesting confidence in the company's future performance. Notably, the company is not just a prominent player in the Broadline Retail industry; it is also trading at a low revenue valuation multiple, which could indicate a bargain for investors at its current price.
For those interested in further analysis, there are additional InvestingPro Tips available for JD.com, offering deeper insights into the company's financial health and market positioning (https://www.investing.com/pro/JD).
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