Wall Street analysts expect Alibaba to report strong quarterly financial results

The bullish expectations on the performance of Alibaba Group is piling up ahead of the official release of its financial results for the December quarter on Thursday, January 29.

Alibaba Group Holding Ltd Earnings Preview: Bullish Expectations Pile Up

Several Wall Street analysts are expecting Alibaba Group Holding Ltd to report strong quarterly earnings and recommended a Buy rating for the shares of the Chinese e-commerce giant.

Analysts’ expectations for Alibaba

Last week, Morgan Stanley analyst Angela Moh and her colleagues said Alibaba Group Holding Ltd remained as one of their top stock picks.

The analysts estimated that the company will be able to deliver a 6% increase in non-GAAP earnings to 11 billion yuan year-over-year. They also expected the company to achieve a 43.5% growth rate in gross merchandise volume revenue (GMV) to 759 billion yuan.

Today, analysts at Stifel reiterated their Buy rating with a price target of $115 for the shares of Alibaba Group Holding Ltd based on their expectations that the company will post strong results for the December quarter.

Stifel analysts estimated that the Chinese e-commerce giant will report non-GAAP earnings of $0.81 per share, higher than the consensus estimate of $0.75 per share. Its revenue is expected to be around $4.605 billion, better than the $4.422 billion consensus estimate. The analysts also estimated that its China retail marketplace would be able to achieve $127.7 billion in GMV.

In addition, Stifel analysts noted that the declining oil prices and some strategic investments served as growth drivers for Alibaba Group Holding Ltd during the December quarter.

Analysts will closely watch Alibaba’s mobile mix and rates

On the other hand, Cantor Fitzgerald analyst Youssef Squali and his colleagues also believed that Alibaba Group Holding Ltd will report strong GMV growth driven by its Singles Day sales event.

The analysts noted that the company posted $9.3 billion GMV from its China retail and international retail market places during the event.Squali and his team said its performance bodes well for the quarter, but they are expecting Alibaba’s monetization to decline by ~2% year-over-year.

They observed that its mobile monetization rate is still lower than PCs. The analysts will closely watch the company’s “mobile mix and rates” during its earnings call.

Meanwhile, UBS analyst Erica Poon Werkun and her team will also monitor Alibaba’s mobile mix and the willingness of advertisers to increase bidding rate due to higher conversion rates.

They will also watch the company’s category mix and the advertiser spending trends related to promotional periods.

In addition, they will also look for diversification strategies, potential margin impacts, longer term potential for the internet finance & e-banking businesses, and  updates regarding the trends in China’s eCommerce market.