Citi analysts opened a 30-day positive catalyst watch on shares of JD.com (NASDAQ:JD) as they expect the Chinese e-commerce giant to announce a new buyback program ahead of its fiscal Q4 2024 report.
Over the past 6-12 months, internet companies have been ramping up their share buyback activities at an accelerating pace, with JD.com being one of them.
After using $2.1 billion of its previous $3 billion buyback program from 2020-21 by March this year, JD fully utilized its latest $3 billion repurchase authorization, announced in March 2024, in just about five months. This highlights JD’s strong commitment to enhancing shareholder returns, analysts note.
“Given there is no outstanding amount left in any of JD’s REPO programs, we believe it is highly likely that JD seeks board approval and announces a new buyback program between now and the 3Q24E result print,” analysts wrote.
“This would support the share price, hence we open a 30-day positive Catalyst Watch,” they said, referring to a research product that identifies upcoming events, data releases, or corporate developments that could significantly impact stock prices within the next 30 days.
Between 2018 and 2023, JD.com saw its total revenue grow at a compound annual growth rate (CAGR) of 19%, while its non-GAAP net profit surged at a 57% CAGR, with the non-GAAP net margin increasing from 0.75% in 2018 to 3.25% in 2023.
For 2024, analysts expect a 4.2% year-over-year growth in total revenue to Rmb1.13 trillion, and a 21% increase in non-GAAP net profit to Rmb42.7 billion, with the non-GAAP net margin expected to rise further to 3.78%.
Such strong profit and cash flow performance would likely enable JD to improve its shareholder return policy, analysts said.