Shares of JD.Com Inc (NASDAQ: JD) surged on Wednesday after the company posted strong first-quarter results.
Benchmark analyst Fawne Jiang said the Q1 results and second-quarter outlook point to "a clear earnings inflection point," with profitability growth "firmly back on track."
The JD.Com Analyst: Jiang, reiterated a Buy rating and raised the price target from $38 to $42.
The JD.Com Thesis: Despite a challenging backdrop, the company delivered modestly better-than-expected revenue, margin expansion and a strong profitability performance, Jiang added.
JD.Com generated 5% year-on-year revenue growth, slightly higher than consensus, he added.
While concerns over margin dilution from higher food delivery investment led to a sell-off in the stock in 2025, the company now seems to be "returning to fundamentals," the analyst stated.
JD Retail's margin expanded despite some revenue headwinds, which was driven by mix improvement and operating efficiency, while losses from new initiatives narrowed 30% year-on-year, he added.
Room For Further Earnings Upside
"Core JD Retail is delivering higher-quality growth, led by sustained strength in general merchandise (GM), advertising, and marketplace monetization, driving margin expansion, while food delivery losses are narrowing faster than expected," Jiang wrote.
The company's investments in automation, robotics, and AI-driven logistics are driving the potential to improve operating leverage over time, which supports its long-term margin trajectory, he further said.
Jiang expects JD Retail to generate 5% revenue growth in 2026, with margins of 4.9%.
The analyst raised the full-year adjusted net income estimate to RMB 30 billion, from RMB 28 billion, to reflect stronger margins at JD Retail and a faster contraction of losses at the food delivery business. The forecast is conservative and leaves room for further earnings upside, he added.
Price Action
Shares of JD.Com had risen by 7.90% to $33.98 at the time of publication on Wednesday.