Analyst: JD.com Stock a "Catalyst Driven Idea"

Analysts and options traders were already bullish, coming into today

Deputy Editor
Jul 25, 2022 at 9:54 AM
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JD.com, Inc. (NASDAQ:JD) is up 2.1% at $62.87 at last check, after Morgan Stanley called the Chinese e-commerce concern a "catalyst driven idea." The analyst in question believes the catalyst could come from a better-than-expected revenue forecast following the company's August earnings report. 

Coming into today, the majority of covering brokerages were already bullish. In fact, nine of the 10 in coverage rated JD a "buy" or better. What's more, the stock's average 12-month price target of $84.35 is a 37% premium to Friday's close.

Options traders have been betting with similarly bullish sentiment lately. This is per JD's 10-day call/put volume ratio of 3.01 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which sits higher than 92% of readings from the past year. Mirroring this, the equity's Schaeffer's put/call open interest ratio (SOIR) of 0.76 stands higher than just 11% of annual readings, indicating short-term traders are operating with a strong call-bias at the moment.

Options look like the ideal avenue to pursue for those looking to speculate on JD.com stock. This is according to the equity's Schaeffer's Volatility Index (SVI) of 66%, which stands in the relatively low 25th percentile of readings from the past year. 

On the charts, today's positive price action should help JD continue to recover from a nearly 10% year-to-date deficit. The security has traded between $59 and $66 for the better part of three months, after recovering from a March 14 annual low of $40.54. Year-over-year, JD.com stock remains down more than 16%.

 

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