Wall Street Rekindles Interest in Alibaba’s Growth Story for 2019

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Alibaba Group Holding Ltd. (NASDAQ: BABA) performed well during the week of February 1, 2019. All in all, its earnings probably should be considered “good enough” for most investors, based on the reaction. Still, while this stock was down 20% from its highs of 2018 on Friday, investors might also want to consider that the shares were also up 30% from the selling depths of the past 45 days.

Alibaba posted $1.77 in earnings per share (EPS) and $17.06 billion in revenue. That compares to consensus estimates from Thomson Reuters of $1.68 in EPS and $17.68 billion in revenue, as well as the $1.53 per share and $11.96 billion posted in the same period of last year.

For this quarter, annual active consumers on China retail marketplaces reached 636 million, an increase of 35 million from the 12-month period ended September 30, 2018. Mobile monthly active users on China retail marketplaces reached 699 million in December 2018, an increase of 33 million over September.

24/7 Wall St. tracked multiple analyst calls to see how the reaction really went and for what to expect into 2019. It turns out most analysts were very positive and raised their price targets.

Merrill Lynch had one of the few price target cuts on¬†Alibaba that were seen after earnings, despite having a positive view. The firm maintained its Buy rating but trimmed its price objective to $215 from $221, noting that Alibaba is not retreating from investing in its key longer-term initiatives of e-commerce overseas, new retail, Cainiao, cloud, local services, media and video. Now the firm expects the company’s blended margins to be continuously affected by these initiatives.

HSBC reiterated its Buy rating and raised its target price to $192 from $190. The firm noted that the earnings beat suggested an attractive valuation, followed by improving economics, rational investments and synergies working in favor of Alibaba.

Other key analyst calls with price target changes this past week:

  • Barclays has an Overweight rating and raised its target price to $200 from $195.
  • CFRA (S&P Global) reiterated its Strong Buy rating and raised its target to $198 from $178.
  • Citigroup has a Buy rating and raised its target price from $208 to $211.
  • Goldman Sachs reportedly reaffirmed its Buy rating and raised its target to $247 from $241.
  • KeyBanc Capital Markets reiterated it as Overweight and raised its target from $200 to $210.
  • Macquarie reiterated its Outperform rating and raised its target to $224 from $220.
  • Nomura/Instinet raised its target price to $205 from $200.
  • Oppenheimer reiterated its Outperform rating and raised its target to $195 from $185.
  • Raymond James raises price target to $285 from $260.
  • Stifel has a Buy rating and raised its target price from $175 to $180.
  • SunTrust Robinson Humphrey raised its target to $200 from $180.

Alibaba shares were trading at $156.88 ahead of earnings, but they were closer to $168.90 late on Friday. The 52-week trading range is $129.77 to $211.70, and the market cap was about $436 billion on last look.