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Farfetch Launches On JD.com, Analysts Bullish On China Prospects

Priya Nigam

Farfetch Ltd (NYSE: FTCH) has announced the launch of its business on JD.Com Inc (NASDAQ: JD) in China about six months ahead of schedule.  

The Analysts

Wells Fargo’s Ike Boruchow maintained an Outperform rating on Farfetch with an unchanged $32 price target.

Bank of America Merrill Lynch's Geoffroy de Mendez maintained a Buy rating and $31 price target.

The Thesis

The earlier-than-scheduled launch on JD.com means that Farfetch will be able to reap the potential rewards of the partnership earlier than anticipated, Wells Fargo’s Boruchow said in a Tuesday note.

The company will have “Level 1” access to around 3 million users who are considered “prequalified” luxury customers, the analyst said. 

China represents Farfetch’s “most compelling long-term opportunity,” as the GMV potential could grow from $200 million today to an estimated $6 billion by 2025, he said. 

BofA's Mendez said Farfetch will benefit from JD’s logistics network.

The JD.com launch completes Farfetch’s turnkey offering for luxury brands wishing to target mainland China, a region that is expected to drive 75% of Chinese luxury spending growth by 2025, the analyst said. 

“This is an entirely new channel with a large existing customer base for Farfetch,” Mendez said, estimating GMV growth of 46% in the back half of 2019.

Price Action

Farfetch shares were up 0.38%  at $21.08 at the close Wednesday. 

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Latest Ratings for FTCH

Date Firm Action From To
Jun 2019 Initiates Coverage On Overweight
Mar 2019 Initiates Coverage On Outperform
Mar 2019 Upgrades Neutral Buy

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