The Ratings Game: JPMorgan sees ‘significant growth potential’ for Wish shopping app

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JPMorgan initiated ContextLogic Inc. WISH, -3.68%, parent company to the Wish shopping app, with an overweight stock rating and $30 price target, writing that the company has “significant growth potential.”

“We expect Wish to deliver more consistent 20%-plus growth over the next couple years as it moves beyond COVID-19-driven supply constraints and fully benefits from its recently established logistics network,” analysts wrote.

Wish is focused on customers with an annual household income below $75,000. JPMorgan estimates that the company currently captures about 3% of that total global market of more than 1 billion households excluding China and India, and less than 1% of the global mobile commerce market, worth about $2.1 trillion.

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“Wish has built a differentiated e-commerce platform, catering primarily to value-conscious buyers by selling affordable and unbranded products,” analysts said.

UBS was also upbeat in its initiation.

“In examining its long-term opportunity, we see Wish executing against a large global household TAM [total addressable market] with several secular tailwinds (mobile commerce, emerging economies, cross border),” analysts led by Eric Sheridan wrote.

While analysts list a number of assets, including “an affordable/entertaining mobile shopping experience ” and the use of data science, there are reasons to be cautious.

“Risk factors include industry competition, potential fraud on the platform, cross border logistics & merchant base, and investor appetite for risk,” UBS said.

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UBS rates ContextLogic stock a buy with a $28 price target.

Stifel analysts note the stock price has dipped since it started at $22.75 on Dec. 16, 2020. Late Monday, it was trading at about $19.60.

“Shares have fallen below the initial offering price of $24 and currently trade at a discount to the peer group as debates surrounding the issues of profitability, China related risk, and the user experience and its long term impact to growth are still to play out,” analysts led by Scott Devitt wrote.

“While Wish possesses many of the attributes we appreciate in a global marketplace, we hold a neutral view while the current debates have yet to be resolved.”

Stifel rates ContextLogic shares hold with a $22 price target.

The Amplify Online Retail ETF IBUY, -0.36% has soared 128.5% over the past year while the S&P 500 index SPX, -0.66% is up 16.3% for the period.

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