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Bear of the Day: Vipshop (VIPS)
Vipshop Holdings (VIPS - Free Report) is an online discount retailer for brands in China. The company offers branded products to consumers in China through flash sales on its website.
Vipshop offers a wide selection of various famous branded discount products including apparel for women, men and children, fashion goods, cosmetics, home goods and other lifestyle products.
The reason that VIPS has fallen into the cellar of the Zacks Rank -- despite beating EPS in the Sep quarter by 33% -- is that estimates for next year were revised 12.7% lower by analysts from $1.34 to $1.17 in the past few weeks.
VIPS is also dealing with a 20% drop in revenues this year and that result is certainly impacting investor and analyst views.
Here was one major bank perspective from late October...
Vipshop price target lowered to $8.50 from $10 at Morgan Staley
Analyst Eddy Wang lowered the firm's price target on Vipshop to $8.50 from $10 and kept an Equal Weight rating on the shares.
Although September online retail sales of goods in China came in better than market expectations, e-commerce is becoming a more mature industry with "industry growth to inevitably slow down in 2023 and onwards" and he believes the new valuation consensus for Chinese e-commerce stocks "could be significantly lower than their historical levels."
This is both a commentary on the "e-comm" revolution and the impact of the global slowdown on China.
Investors who like Vipshop as a long-run China opportunity in the largest consumer market on the planet could wait this out and be buying new shares at even lower levels.
The Zacks Rank will let you know.