JPMorgan upgrades JD.com from Not Rated to Overweight, saying 2026E earnings upside risk is more pronounced

Overview

This is a rating change report by JPMorgan on JD.com, Inc. After the blackout period ended, the firm upgraded JD.com to Overweight and set a Dec-26 target price of US$38/HK$148. The core reason is that, unlike many Chinese internet peers facing downside earnings risk, JD.com has upside to 2026E earnings, driven especially by core business resilience and narrowing new-business losses.

Core views

The report argues that investors should focus on upside risk to JD.com's 2026E earnings: first, 4Q25 results and 2026 guidance show core business resilience; second, the most aggressive investment phase in quick commerce is over; third, expansion spending for international businesses such as JoyBuy is currently relatively restrained. JPMorgan expects 2026E adjusted net profit of Rmb35b, above the consensus estimate of Rmb30b, and believes that if new-business losses narrow more than expected, there is further upside to 2026E/2027E earnings and the share price.

Analysis framework

The report is developed from four angles: business fundamentals, earnings estimate revisions, deviation from consensus, and valuation multiples. The fundamentals section focuses on JD Retail revenue and operating profit trends, government subsidies, general merchandise growth, easing of subsidies in quick-commerce competition, and JoyBuy customer acquisition spending; the valuation section uses 9x 2027E P/E, equivalent to about 11x 2026E P/E, and compares with sub-10x trading levels among Chinese e-commerce peers.

Methodology notes

• Valuation methodsP/E multiple valuation

  Target price based on 9x 2027E P/E

  JPMorgan's Dec-26 target price of US$38/HK$148 is based on 9x 2027E P/E, which is roughly equivalent to 11x 2026E P/E. The report argues that this valuation level can be supported if there is room to revise earnings forecasts upward.

• Earnings forecastConsensus deviation analysis

  JPMorgan's forecast is above Bloomberg consensus

  The report raised 2026/27E adjusted net profit by 13%/26%, leaving it 17%/7% above Bloomberg consensus, respectively, mainly because it is more optimistic about the narrowing of quick-commerce losses.

• Business segmentationCore business and new business segment analysis

  Core business resilience and narrowing new-business losses jointly drive earnings upside

  The report separates core businesses such as JD Retail from new businesses such as quick commerce and JoyBuy, and believes the core business remains competitive while pressure from new-business losses may be lower than the market expects.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• 09618.HK

  JD.com Hong Kong-listed stock

  Strengths

  Target price HK$148 versus current price HK$115.40; the report believes core business resilience and narrowing new-business losses create upside to earnings.

  Weaknesses

  Competition in the China e-commerce market is intense, revenue growth prospects are ordinary, and new businesses still face loss pressure.

  Comparison

  The report says most Chinese e-commerce peers trade below 10x, while JD.com's target price is based on about 11x 2026E P/E; after excluding new-business losses, core 2026E P/E is about 6x.

  Risks

  Unexpected market share loss, less-than-expected margin improvement, and a further weakening of Chinese macro consumption.

• JD US

  JD.com U.S. ADR

  Strengths

  Target price US$38 versus current price US$28.94; the same investment logic as the Hong Kong listing, benefiting from upside risk to 2026E earnings.

  Weaknesses

  Valuation rerating depends on earnings delivery and the market's recognition of narrowing new-business losses.

  Comparison

  The Dec-26 target price is also based on 9x 2027E P/E.

  Risks

  Narrowing of new-business losses falls short of expectations, core retail growth is volatile, and competition intensifies.

• JD Retail

  core business segment

  Strengths

  The report believes JD Retail still remains competitive in the China e-commerce market, and government subsidies plus double-digit growth in general merchandise support near-term business growth.

  Weaknesses

  Quarterly YoY performance in the next few quarters will fluctuate due to the high base in 2Q26 and the low base in 2H26.

  Comparison

  Compared with new businesses, JD Retail is the core stable business supporting valuation.

  Risks

  A deterioration in industry competition or loss of market share would drag on revenue and profit.

• quick commerce and JoyBuy

  new business and international expansion-related businesses

  Strengths

  The most aggressive investment phase in quick commerce may be over, and subsidies have cooled after regulatory opposition to irrational competition; JoyBuy's customer acquisition spending currently appears restrained.

  Weaknesses

  These businesses are still in the investment phase, and there is uncertainty around loss size and spending pace.

  Comparison

  The consensus may still assume 2026 new-business losses similar to 2025's Rmb45b, while JPMorgan sees room for losses to narrow.

  Risks

  Re-acceleration of competition, investment in international expansion exceeding expectations, and new-business losses narrowing less than expected.

Key data

• Rating changeNot Rated -> OverweightCoverage resumed after the blackout period and the rating was upgraded to Overweight.
• Target priceUS$38 / HK$148Dec-26 target price.
• Current priceUS$28.94 / HK$115.40The U.S. share price is as of 2026-04-13, and the Hong Kong share price is as of 2026-04-14.
• 2026/27E revenue forecast revision+1% / +2%JPMorgan raised revenue forecasts.
• 2026/27E adjusted net profit forecast revision+13% / +26%Mainly due to quick commerce losses being lower than expected.
• 2026E adjusted net profitRmb35bAbove the consensus estimate of Rmb30b.
• 1Q26 revenue forecast+3% YoYBroadly in line with consensus.
• 1Q26 adjusted net profit forecastRmb5.9b16% above consensus, but still below the Rmb12.8b in 1Q25.
• Valuation multiple9x 2027E P/EEquivalent to about 11x 2026E P/E.
• Core 2026E P/E6xAfter excluding all new-business losses, the report says the stock trades at only about 6x core 2026E P/E.

Impact & implications

The investment implication of the report is that the market may be underestimating the earnings leverage from narrowing new-business losses in JD.com's 2026E and 2027E results. If quick-commerce subsidy competition continues to cool, JoyBuy investment remains restrained, and JD Retail maintains competitiveness, then earnings upgrades could drive valuation rerating. Conversely, if market share continues to erode or competition prevents margin improvement, the rating and target price will face pressure.

Risks

• Market share losses exceed expectations, leading to disappointing revenue growth.
• Changes in strategy or intensifying competition prevent margins and profits from improving.
• A further deterioration in China's macro environment weighs on overall consumption.
• The narrowing of new-business losses is smaller than the report assumes.

What to watch

• Whether 1Q26 revenue growth is close to 3% YoY and adjusted net profit reaches around Rmb5.9b.
• JD Retail's revenue and operating profit resilience driven by government subsidies and general merchandise sales.
• Whether subsidy competition in quick commerce continues to cool and losses improve sequentially.
• The pace of customer acquisition spending in JoyBuy after its launch in Europe and the expansion in international business losses.
• Whether 2026/27E earnings continue to exceed Bloomberg consensus.