Citi On Alibaba: Raising Price Target And Estimates

Citi maintains its Buy rating on the shares of Alibaba Group Holding Ltd BABA, while raising target price and estimates, ahead of its first-quarter results on August 11.

For the first quarter, analyst Alicia Yap expects total revenues to grow 48.6 percent to RMB30.1 billion ($4.552 billion), largely in line with consensus estimates. The analyst models non-GAAP EPS of Rmb4.17 ($0.63) per share, in-line with consensus.

Further, the analyst estimate total GMV to rise 22 percent to Rmb822 billion with Taobao at Rmb500 billion (+17 percent year-over-year) and Tmall at Rmb322 billion (+31 percent year-over-year).

Related Link: Cantor Fitzgerald Likes Alibaba Ahead Of Q1 Earnings Release

"We model monetization rate of 2.67 percent, with PC at 2.92 percent and mobile at 2.58 percent," Yap wrote in a note.

According to Yap, the following should be the key focus on the call:

1. "Monetization improvement and digital media integration update."
2. "Segment disclosure and acquisition margins impact."
3. "Advertising tax impact to P4P revs and margins."
4. "Update on O2O, global, cloud computing and logistics services."
5. "Consumption behavior and China economic condition."

The analyst hiked FY2017 non-GAAP EPS estimate by 7 percent to $3.20 from $2.99 and revenue forecast by 3.4 percent to $22.28 billion from $21.55 billion.

Yap also increased the price target by $6 to $104, implying a potential upside of 22.9 percent.

At the time of writing, shares of Alibaba were up 0.44 percent on the day at $84.96.

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