Vipshop Holdings Ltd – ADR Stock Rises After Earnings Beat

Vipshop posted adjusted earnings of 12 cents per share on $1.36 billion in revenue for the fourth quarter

Vipshop released its latest earnings report earlier this week, and it was a solid beat. At least one firm has bumped up its price target for the Chinese internet company in the wake of the earnings beat. Shares of Vipshop edged upward by as much as 2.39% to $25.71 per share today in the wake of the beat.

Vipshop price target upped

In a report dated Feb. 18, Credit Suisse analysts Evan Zhou and Dick Wei said they have increased their price target for Vipshop from $24.50 to $31 per share. They maintained their Outperform rating on the stock.

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Vipshop posted $1.36 billion in revenue for the fourth quarter, a 109% improvement year over year and a 54% increase quarter over quarter that beat the consensus estimate by 10%. Guidance for the first quarter was for revenue of between $1.25 billion and $1.3 billion, which also beat the consensus estimate of $1.19 billion.

Adjusted earnings per average diluted share were 12 cents for the fourth quarter, a 145% increase year over year that was also ahead of consensus estimates at 9 cents per share.

Vipshop keeps expanding customer base

Management said they remain confident in growing their user base this year. Mobile gross merchandise volume was 66% of the total in the fourth quarter and continues to drive traffic, according to the Credit Suisse team.  In the Cosmetics segment, gross merchandise volume was $249 million glosing the gap with the level of the leader in that category.

Vipshop invests in delivery services

Vipshop continues to invest on customer acquisition and logistics. The Chinese online retailer already handles delivery for half of its total orders in house. Management plans to be handling 70% of total orders by the end of this year.

During the fourth quarter, Vipshop saw fulfillment costs as a percentage of product revenue fall to 9.5% as the average ticket size and better logistics efficiency helped cut costs. The company expects to keep investing in last mile delivery and warehousing this year. Vipshop management reportedly said they expect to operate warehouses with a total floor area of about 1.6 million square feet.

Vipshop estimates raised

The Credit Suisse team bumped up their estimates for Vipshop as well. Their non-GAAP earnings per share estimate for 2016 increased 5%. They see a strong tailwind from rising revenue but a partial offset from user acquisition and research and development investments.

Aside from the Credit Suisse team, Tiger Global is also a big fan of Vipshop. Between Vipshop and competitor Alibaba, Tiger Global enjoyed a 21% return in 2014.