Alibaba Group Holding Limited BABA stock gained on Friday after multiple analysts raised their price forecasts following the company’s mixed fiscal first-quarter earnings on Thursday.
The results came amid an exciting earnings season. Here are some key analyst takeaways.
Alibaba reported fiscal first-quarter 2024 revenue growth of 4% year-on-year to $33.47 billion, lagging the analyst estimate of $34.81 billion. Adjusted earnings per ADS of $2.26 topped the consensus estimate of $2.13.
Citigroup analyst Alicia Yap maintained Alibaba with an Overweight and raised the price target from $100 to $108.
JP Morgan analyst Alex Yao reiterated Alibaba’s rating as Overweight and raised the price target from $100 to $108.
Bernstein analyst Robin Zhu maintained Alibaba with a Market Perform and raised the price target from $80 to $85.
Baird analyst Colin Sebastian reiterated Alibaba’s Outperform rating and raised the price target from $85 to $88.
Truist Financial analyst Youssef Squali maintained a Buy rating on Alibaba, reducing the price target from $110 to $100.
Benchmark analyst Fawne Jiang reiterated a Buy rating on Alibaba with a price target of $118.
Truist Financial: Alibaba’s first-quarter results show sustained operational execution against a challenging macro with high-single-digit year-on-year growth in GMV, reflecting market share stabilization at Taobao and Tmall Group (TTG) fueled by higher order frequency, Squali noted.
Still, fiscal 2025 remains an investment year across TTG, Alibaba International Digital Commerce Group (AIDC), and Cloud, which should keep margins in check shortly, the analyst added.
The rerating reflects Squali’s expectation for customer management revenue’s (CMR) growth, better traction at AIDC, demand growth in Cloud, and expectations for most money-losing segments to reach breakeven.
Squali projected second-quarter revenue of $32.8 billion (231.0 billion Chinese yuan).
Benchmark: Jiang noted that in a closely monitored fundamental turnaround, healthy GMV growth in the first quarter strengthened the markets’ conviction of Alibaba’s market share stabilization.
It did come at a cost with a widened gap between GMV and CMR, which resulted in the miss on revenue for the quarter, the analyst flagged.
Yet, according to the analyst, Alibaba has the potential to stem or reverse its multiple contractions should CMR growth recovery materialize in the coming quarters off a sustained healthy level of GMV growth.
Jiang projected second-quarter revenue of 237.5 billion Chinese yuan.
Price Action: BABA shares traded higher by 5.68% at $84.06 at the last check on Friday.
Photo by Fooksou Lamimo via Wikimedia Commons
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