UBS lowers JD.com's target price to 187 yuan, facing a high base in the last quarter

UBS research report pointed out that JD Group-SW (09618.HK) exceeded expectations in its third-quarter performance, with solid performance in core JD Retail (JDR), but revenue growth was dragged down by new businesses, increasing by 15% year-on-year, surpassing UBS's forecast by 2%. Adjusted operating profit fell short of expectations, but quarterly adjusted net profit exceeded expectations, benefiting from other income.

UBS stated that overall, although JD's core business is strong, the short-term outlook remains unclear. On the positive side, JD's strong core retail business, the continuously developing ecosystem of third-party merchants, strong cross-selling, and improving unit economics in food delivery (FD) lay a solid foundation for JD's long-term growth.

UBS also noted that despite JD's valuation not being high, concerns about intense competition in the fast retail sector, relatively moderate stock buybacks in the third quarter, and high bases in the fourth quarter and the first half of 2026 may limit JD's recent upside potential.

In terms of valuation, UBS suggested that investors focus on the sum-of-the-parts valuation method rather than the overall price-to-earnings ratio, considering the upfront and variable nature of food delivery investments. After JD's earnings announcement, UBS lowered its adjusted operating profit forecasts for the next two years by 2% to 4%, and reduced the target price for US stocks (JD.US) from $50 to $48, while the target price for H shares was lowered from HKD 195 to HKD 187; rating "Buy."