JD sells a variety of things through its website and mobile applications, including furniture, electronics, apparel, luxury goods, jewelry, home goods, food, books, media products, toys, exercise equipment, and virtual goods.
JD has held up well in 2022 and is just modestly down year to date, in contrast to several Chinese-related equities. A run of earnings beats dating back to 2019 is one factor for its the relative strength.
Better Q2 results
According to the Zachs Equity Research, JD posted a 32% EPS increase for Q2 in late August. In addition to beating expectations overall, the firm experienced an increase in EBITDA margin from 1.5% to 2.7%.
The management expressed their satisfaction with the topline increase in light of the difficult time. In July 2022, they said, the JD.com premium membership program passed the threshold of 30 million registered members, breaking the previous scale record.
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The stock responded quite favorably to the earnings announcement, rising in only four days from the $55 range to an August high of $67.87. Since that upward movement, the stock has declined, but rising estimates should prevent any more selling.
All time frames have seen estimates go higher during the past 30 days. We have witnessed changes in numbers from $0.55 to $0.62, or 13%, for the current quarter. Over the same period, they have risen by a little 13% for the next quarter.
Analysts predict that the momentum will continue in the future. Estimates for the current year increased by $1.86 to $2.15, or 11%, during the previous 60 days. Analysts have projected numbers 3% higher for the next year.
Analysts are likewise setting price predictions higher than the present levels of trade. After results, Susquehanna reaffirmed JD with a Neutral rating and increased their targets from $55 to $62. Benchmark maintained its Buy rating and $109 price target for JD.
Technical picture bearish
The fundamental situation remains bright, however, the technical picture not so. The price is currently testing the medium-term upper trend line and it looks like we could see a decline below that support of 57 USD.
In that case, the next target for bears could be 55 USD. More importantly, the medium-term uptrend would likely be over, implying further weakness in the near term.
On the upside, JD must climb back above 60 USD to confirm that the bullish momentum remains intact.