Making The Case For Nearly 20% Upside In Baozun Shares

Analysts at Bank of America turned incrementally bullish on Baozun Inc (ADR) (NASDAQ: BZUN), a China-based e-commerce solutions company that engages in the sales of apparel, home, electronic products and more. The firm's Binnie Wong maintains a Buy rating on Baozun's stock with a price target raised from $34 to $38 after hosting an investor meeting with the company's management team.

Baozun emphasized its unique strategic positioning within the Chinese e-commerce market along with its strong ties between brands and Alibaba Group Holding Ltd (NYSE: BABA)'s ecosystem to fuel growth, Wong noted. The company was also selected to be one of just eight databank partners by Alibaba and it also happens to be the only company that is able to provide a full-range of end-to-end e-commerce and digital marketing solutions.

Meanwhile, Baozun's new commission-based structure will likely result in the company capturing more upside on brand partners' performances, the analyst continued. In addition, the company believes that improvements to its own technology and the use of robotic services will compensate for the loss of fixed fees.

Baozun is also focusing more on online branding marketing trends which will help the company gain exposure into categories that have low presence online.

Finally, management reiterated that its large capex expansion of RMB350 million in 2017 is indeed a one-off investment and is expected to provide enough capacity for mid-term growth, the analyst also highlighted.

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