Analysts, Investors Like Alibaba's Q2 Print, Expanding Market

Alibaba Group Holding Ltd BABA shares were on the rise Monday following the Chinese internet company's report of solid second-quarter results, and sell-side analysts were continuing to recommend the stock amid an expanding digital marketplace.

The Analysts

Bank of America Merrill Lynch analyst Eddie Leung reiterated a Buy rating and increased the price target from $233 to $234.

Benchmark’s Fawne Jiang reiterated a Buy rating and $220 price target.

The Takeaways

The core business remains healthy, Leung said in a Monday note, pointing to mid-20% year-over-year growth in its high-margin commission and customer management businesses and TMall online marketplace.

BofA's Buy rating reflects "relatively healthy domestic consumption and long-term optionality from some of the new initiatives," the analyst said, adding that he is nudging up the price objective by $1 on the higher value of long-term investments on the balance sheet.

Jiang cited Alibaba's long-term growth prospects from an expanding market, and through increasing digitization, which Jiang said should lead to future earnings power.

"We view BABA as one of the best ways to play China’s secular consumption upgrade and technology reinvention," the analyst said in a Monday note.

Leung also noted recent media reports that Alibaba could be dual listed in Hong Kong, which he said could mean "moderate dilution."

Such a move also mitigates the risk of a delisting of its ADR stock in the U.S., the analyst said.

Price Action

Alibaba stock was trading 1.62% higher at $179.31 at the time of publication Monday. 

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