UBS Affirms JD.com's (JD) 'Buy' rating Cuts Price Target on Spending Concerns

JD.com, Inc. (NASDAQ:JD) is one of the top e-commerce stocks with significant long-term potential. On July 10, UBS reiterated a ‘Buy’ rating on the stock. However, the research firm cut its price target to $50 from $58 amid concerns over increasing investments in the food delivery business.

UBS is concerned that JD.com may need to invest more to maintain its competitive edge in the food delivery business. It estimates that the company might have spent upwards of RMB 10 billion, comparable to Alibaba’s spending in the quarter.

The research firm expects JD.com food delivery investments to reach Rmb14 billion in the third quarter before dropping to Rmb11 billion in the fourth quarter. Nevertheless, UBS maintains a Buy rating as it expects the company to maintain its return on investment as part of its food delivery strategy while also balancing its strong volume growth.

UBS also expects Jd.com to benefit from traffic growth in the beverages segment amid heightened spending from female users and those in lower-tier cities. The company should also capitalize on rapid growth in daily and monthly active users.

JD.com, Inc. (NASDAQ:JD) is a leading Chinese technology-driven e-commerce company. It operates a vast retail business and also offers services in technology, logistics, healthcare, and other sectors.

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Disclosure: None. This article is originally published at Insider Monkey.