Why Vipshop Won a KeyBanc Upgrade


Jan. 30 2019, Updated 4:50 p.m. ET

Price target set at $10

KeyBanc recently upgraded its rating on Vipshop (VIPS) stock to an “overweight” from a “sector-weight.” At the same time, KeyBanc set a price target of $10 on Vipshop stock, implying a potential 55% upside from where the stock closed just before the upgrade was announced.

KeyBanc upgraded its rating on Vipshop and issued a bullish price target on the stock on the basis of its improving sales. Vipshop generated revenue of $2.6 billion in the third quarter of 2018, an increase of 16.4% YoY (year-over-year). Vipshop is a Chinese e-commerce company. Its domestic peers Alibaba (BABA) and JD.com (JD) reported 54% and 25% YoY revenue rises, respectively, in the same quarter. Amazon (AMZN) and eBay (EBAY) reported revenue rises of 29% and 6.0% YoY, respectively, in the quarter.

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26.5 million active customers

Vipshop’s revenue growth in the third quarter was supported by an increase in its number of active customers as well as an increase in its average spending per customer. The company exited the quarter with 26.5 million active customers, up from 23.8 million in the previous year’s period. Its rivals Alibaba and JD boasted much larger customer bases at 600 million and 305 million, respectively, at the end of the quarter. Vipshop reported that its average revenue per customer had risen 5.0% YoY.

Up to 13% revenue growth

Vipshop is expecting fourth-quarter revenue in the $3.8 million–$4.1 million range, implying growth of up to 13% YoY.


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