UBS expects JD.com to see earnings recovery in 1Q26, with a Buy rating and US$48.00 target price

Overview

This report is UBS's 1Q26 earnings preview for JD.com. The core view is that, despite a weaker macro environment and a more challenging comparison base for e-commerce growth, JD Retail still shows strong resilience, with revenue returning to positive growth. Better category mix, supply-chain capabilities, and higher contributions from the 3P business should support margins. UBS believes competition in food delivery is becoming more rational, and narrower losses in the new businesses could create upside to 2026 earnings.

Core views

UBS expects JD Group 1Q26 revenue to grow 3% YoY, including JD Retail revenue up 1.5% YoY, electronics and home appliances down only 9%, general merchandise remaining at about 13% growth, and net service revenue up 17%. On the profit side, JD Retail operating profit is expected to fall 4% YoY to Rmb12.4bn, but product mix upgrades, supply-chain advantages, and higher-margin 3P business contributions should offset platform subsidy pressure. Group adjusted net profit is expected to be Rmb5.8bn, above the consensus estimate of Rmb5.0bn. The report argues that if food delivery losses narrow faster than expected, it could provide meaningful upside to full-year earnings.

Analysis framework

The report combines segment-level earnings previews, revenue growth decomposition, margin driver analysis, and valuation comparison. On the revenue side, it focuses on JD Retail, general merchandise, electronics and home appliances, service revenue, and advertising/marketplace business. On the profit side, it examines product mix, subsidy spending, 3P mix, new business losses, and food delivery unit economics. On valuation, it assesses risk-reward using 2026E P/E, net cash as a percentage of market cap, and shareholder returns.

Methodology notes

• Valuation methodsSOTP

  Sum-of-the-parts valuation

  The report explains that the target price is derived from the SOTP method, which values different business segments separately and then sums them to reflect the value of retail, services, new businesses, and cash.

• Earnings ForecastSegment revenue and profit breakdown

  Break down growth and profit contribution by business line

  The report separately evaluates JD Retail, net service revenue, marketplace and advertising revenue, and new business losses to assess group revenue resilience and adjusted net profit recovery.

• Valuation ComparisonP/E and net cash assessment

  Measure risk-reward using 2026E P/E and net cash ratio

  The report notes that JD currently trades at about 8x 2026E P/E and has about US$18bn in net cash, equal to roughly 40% of market cap, which supports its view that the risk-reward is attractive.

Asset mapping & comparison

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

• JD.US

  Core coverage name; U.S.-listed ADR

  Strengths

  Resilient retail revenue, supply-chain capabilities, rising contributions from high-margin businesses such as 3P and advertising, ample net cash, and a low valuation.

  Weaknesses

  Weak macro conditions, high YoY comparison pressure in electronics and home appliances, and ongoing losses in food delivery and new businesses.

  Comparison

  The report says the stock has underperformed peers because of food delivery investment, macro pressure, and the lack of an AI theme, but JD benefits from a more favorable revenue mix and has outperformed some peers.

  Risks

  Low earnings visibility, intensifying competition, uncertain returns on fulfillment infrastructure investment, and regulatory changes.

• 09618.HK

  Hong Kong-listed security of the same company

  Strengths

  Fundamentally aligned with JD.com, benefiting from retail resilience, cash levels, and earnings recovery.

  Weaknesses

  Also exposed to macro risk, e-commerce competition, and losses in new businesses.

  Comparison

  The report mainly presents pricing and target price for JD.US; 09618.HK is identified as the Hong Kong-listed security of the same issuer.

  Risks

  Hong Kong liquidity, market risk appetite, and company fundamentals may affect performance.

Key data

• 12-month target priceUS$48.00Target price disclosed on the report cover.
• Current priceUS$28.94Price as of 2026-04-13.
• 12-month ratingBuyRating shown in the report graphic.
• 1Q26 group revenue forecast+3% YoYUBS forecast for JD Group revenue.
• 1Q26 JD Retail revenue forecast+1.5% YoYImproving from -1.7% in 4Q.
• 1Q26 group adjusted net profit forecastRmb5.8bnAbove the consensus estimate of Rmb5.0bn.
• 1Q26 JD Retail operating profit forecastRmb12.4bnExpected to decline 4% YoY.
• New business operating loss forecastRmb12bnNarrowing from Rmb15bn in 4Q.
• 2026 adjusted net profit forecastUBSe Rmb34bn; consensus Rmb30bnThe report believes narrower losses could lead to earnings upside.
• Valuationabout 8x 2026E P/EBased on a conservative earnings base.
• Net cashabout US$18bnRoughly 40% of market cap.

Impact & implications

If UBS's view proves correct, market concerns that food delivery investment is weighing on profits, that weak macro conditions are constraining JD Retail growth, and that the company lacks a direct AI theme may gradually ease. Earnings recovery, narrower losses, and a low valuation together improve the stock's appeal; however, if macro demand, competition, or new business spending worsens, earnings delivery could still fall short of expectations.

Risks

• Low earnings visibility.
• Intensifying competition, especially in e-commerce and food delivery.
• Uncertain returns on fulfillment infrastructure investment.
• Regulatory changes may affect the business model and valuation.
• During business restructuring, it will take time to establish the optimal new business model.
• Weak macro conditions and higher comparison bases may weigh on JD Retail growth.
• If food delivery losses do not narrow as expected, group earnings will be pressured.

What to watch

• Whether 1Q26 JD Retail revenue returns to positive growth as expected.
• Whether the decline in electronics and home appliances revenue continues to narrow.
• Whether general merchandise, supermarkets, and fashion categories can become the core revenue drivers.
• The pace of food delivery loss narrowing and improvement in unit economics.
• The impact of platform subsidy intensity on margins.
• Whether Jingxi and international business investment remains ROI-driven.
• Whether 2026 adjusted net profit approaches or exceeds UBSe Rmb34bn.
• Whether the market re-rates the stock's roughly 8x 2026E P/E and net cash value.