What to Expect From Alibaba Earnings

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Alibaba Group Holding Ltd. (NYSE: BABA) is set to release its second-quarter financial results before the markets open on Thursday. The Thomson Reuters consensus estimates are $0.63 in earnings per share (EPS) on $4.54 billion in revenue. In the same period of last year Alibaba posted EPS of $3.68 and $20.25 billion in revenue.

Right around this time two years ago, Alibaba was the hottest thing on the planet and getting ready to come public. This company is the largest online and mobile commerce company as measured by gross merchandise volume, and it had the highest profile initial public offering (IPO) of 2014. The stock has acted horrible since, printing highs at $120 in mid-November of 2014.

Plain and simple, the dominance in Alibaba’s core business, the very hard barrier to entry for competition and new growth opportunities like cross-border e-commerce make the stock extremely attractive. With most of the damage to the China equity markets seemingly subsided for now, the residual effect to the company may all subside some.

Currently, analysts see the company as cheap, with outstanding premium growth potential. They also note that the company has gone beyond e-commerce and developed into a sophisticated new type of conglomerate in the cyber-era with e-commerce as the base for the rest of the four businesses: logistics, finance, data-computing and cross-border infrastructure. They expect a whopping 24% compounded annual growth rate between now and 2018 for e-commerce in China.

A few analysts weighed in Alibaba ahead of the earnings report:

  • Morgan Stanley reiterated an Overweight rating.
  • Cantor Fitzgerald reiterated a Buy rating with a $95 price target.
  • Citigroup has a Buy rating with a $104 price target.
  • MKM Partners has a Buy rating with a $95 price target.
  • Brean Capital reiterated a Buy rating.
  • Baird reiterated an Outperform rating with a $94 price target.
  • Standpoint Research has a Hold rating.
  • Evercore ISI reiterated a Buy rating with a $98 price target.
  • Jefferies has a Buy rating with a $101 price target.
  • Credit Suisse reiterated an Outperform rating with a $114 price target.

Excluding Wednesday’s move, Alibaba has underperformed the broad markets, with the stock up only 5%. Over the past 52 weeks, the stock is up about 6%.

Shares of Alibaba were trading up 2.6% at $87.41 on Wednesday. The consensus analyst price target is $97.56 and the 52-week trading range is $57.20 to $87.73.