Alibaba stock is on track for a second day of strong gains as analysts from multiple firms raise their price targets for the Chinese online retailer on the back of its strong earnings report. While most firms are extremely positive on Alibaba, one firm is warning that deceleration is coming, even though it hasn’t materialized yet.
At the most bullish end of the spectrum, Goldman Sachs added the stock to their Conviction Buy list and say they see the potential for it to hit $137 per share.
Wedbush remains Neutral on Alibaba
Wedbush analysts Gil Luria and Aaron Turner upped their price target from $80 to $90 per share but remain firmly in the bear camp. They continue to rate the Chinese company at Neutral. They do see Alibaba as “a fast-growing global ecommerce market leader,” but they expect the Chinese economy to slow down, which in turn could place a cap on the company’s share price increase, they warn.
The Wedbush team noted that Alibaba’s 59% increase in revenue brought it to $4.84 billion, which beat the consensus of $4.54 billion. They added that steady growth in gross merchandise volume, better mobile monetization, and rapid growth of other initiatives (such as Ali Cloud) drove that outperformance.
This was the first earnings report with the new reporting structure, and Luria and Turner noted that the new breakdown shows the extent of the core business’ profitability and also its areas of investment. They do believe that monetization improvements and scope expansion are helping the company “transcend volume growth” as the China gross merchandise volume grew 24% despite slowing trends in the Chinese economy.
Is the Chinese consumer healthy?
When looking at JD’s deceleration, which was only slight, combined with Alibaba’s ecommerce growth, they add that the Chinese consumer appears to be healthy. However, the Wedbush team believes the improvement in monetization, which grew to 2.79% from last year’s 2.33%, was the key to growth for Alibaba. They also believe the extra growth in the non-commerce business helped bolster the company’s results.
Looking at broader data on the Chinese economy, they warn that it is barely growing that that consumer spending there is decelerating. They add that while Alibaba could buck the trend for some time, they don’t think it will be able to fully escape if the downturn worsens.
Alibaba added to Goldman’s Conviction List
Goldman Sachs analyst Piyush Mubayi and team raised their price target for the company to $120 from $104 and added it to their Conviction Buy List. They added that if Alibaba stock traded “in line with its medium-term growth outlook (25X),” their target would rise to $137 per share.
Also Raymond James analysts upgraded Alibaba from Outperform to Strong Buy and raised their price target to a bullish $124 from $95 per share. Also JPMorgan analysts upped their target for the Chinese online retailer from $96 to $129 per share, and Brean Capital analysts raised their target from $100 to $115 and reiterated their Buy rating. Evercore ISI analysts moved their target from $98 to $110 per share, while Oppenheimer reiterated its Outperform rating and bumped up its target from $110 to $115 per share. Jefferies analyst Jesse Guo reiterated his Buy rating and raised bumped up his target from $101 to $103.
Shares of Alibaba climbed by as much as 3.43% to $94.92 in morning trades on Friday.