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JD.com (NASDAQ:JD) is expected to pull off a solid quarter, smashing revenue and profit expectationsthanks to its trade-in program doing some serious heavy lifting. Morgan Stanley now sees revenue up 10.5% year-on-year, blowing past the market's 6% forecast. Non-GAAP net profit? 10.2 billion yuan, up 22%, pushing margins higher. But here's the catch: Analysts aren't ready to flip bullish just yet. The firm says it still needs proof that consumer sentiment is actually turning the corner before calling this a long-term win.
Looking ahead, Morgan Stanley forecasts 6.9% revenue growth for the yearagain, ahead of market estimateswith non-GAAP net profit hitting 50 billion yuan, up 6%. Margins are set to climb to 4.05%, showing JD.com is squeezing more out of every yuan. The strong report prompted analysts to bump up earnings estimates, proving that JD's trade-in strategy is paying off.
Yet despite the beat, Morgan Stanley isn't ready to go all-in. The firm sticks to its "in line with the market" rating with a $41 price target. The big question: Can JD.com keep this momentum going in a still-shaky consumer environment? Until that answer is clear, investors are watching from the sidelines.
This article first appeared on GuruFocus.