VIPS - Vipshop Holdings upgraded at Citi on continued improvements in revenue trends

Vipshop Holdings ( NYSE: VIPS ) was upgraded to outperform by Citi on Monday, as the investment firm cited continued improvements in revenue trends for the Chinese e-commerce company.

Analyst Ashley Xu raised the firm's rating on Vipshop Holdings ( VIPS ) to outperform from neutral, along with a $12 price target, noting that the company's recent second-quarter results showed it can handle the ongoing economic uncertainty.

"While management cautiously guided 10-15% revenue decline for [third-quarter] in consideration of macro, Covid, and weather uncertainties, we expect a beat with 8% decline in [the third-quarter] and growth to flip to positive in [fourth-quarter]," Xu wrote in a note to clients. The analyst added that a "meaningful" sales recovery since June, stabilization of the number of users, its SVIP program and continuing to improve the product should all help the company.

Vipshop Holdings ( VIPS ) shares rose more than 0.5% to $10.05 in premarket trading.

In addition, Xu noted that Vipshop Holdings ( VIPS ) has continued to streamline its cost structure, having stopped offering self-subsidized coupons and has continued to improve its marketing spending.

As a result, Xu raised her earnings per share estimates for 2022 to 2024 by 12% to 23%.

For the third-quarter, Vipshop Holdings ( VIPS ) expects revenue to between RMB21.2 billion and RMB22.4 billion, representing a year-over-year decrease rate of ~15% to 10%, compared to an estimated decline of 14.03% year-over-year .

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