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<Research>Nomura Downgrades Vipshop (VIPS.US) to Neutral with TP Axed to US$14
Recommend 19 Positive 24 Negative 8 |
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Nomura lowered its investment rating on Vipshop (VIPS.US) from Buy to Neutral and cut its target price from US$21 to US$14. The report stated that Vipshop must face a tough choice between maintaining stable profit margins and revenue growth. The report also noted that the operating environment deteriorated due to escalated competition from e-commerce giants, and price competition in the e-commerce industry has never been so fierce. Pinduoduo (PDD.US) initially adopted a low-price strategy, which was subsequently emulated by BABA-SW (09988.HK)(BABA.US) and JD-SW (09618.HK)(JD.US). BABA and JD, among others, provide consumers with benefits, including lower thresholds for free shipping and easier returns. Nomura believed that the intensifying competition has had a detrimental impact on the e-commerce ecosystem. The emphasis on low prices among e-commerce behemoths is expected to negatively impact smaller peers such as Vipshop, as consumers are more likely to remain loyal to the e-commerce leaders when they offer discounts. However, the broker believed that Vipshop's super VIP loyalty program is still strong, with this type of customer accounting for 16% of the quarterly active customer base. AAStocks Financial News |
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