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.

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 39.7% gains over the past 12 months and outperformed the 24.1% gain enjoyed by the S&P 500 ETFs. Our enhanced small-cap hedge fund strategy returned more than 45% over the last 12 months and outperformed SPY by more than 30 percentage points over the last 4.5 years (see details here).

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

Wall Street Bull