Brocker.Org: Alibaba: Raymond James Likes What It Sees


Alibaba Group Holdings Ltd. (BABA) posted a 60% increase in revenue year over year (YOY) in its March quarter and one Wall Street investment firm thinks it can see nearly 30% upside in its stock.

Late Thursday, coming off of the China ecommerce giant’s quarterly earnings report, Raymond James analysts Aaron Kessler, Justin Patterson and James Pardee raised their price target on the stock to $160, becoming the Wall Street firm with the highest PT on the online retailer. MMK Partners previously held the title with a $150 price target, noted Barron’s. Raymond James previously set $138 as the target for shares to hit. The Wall Street firm maintained its strong buy rating on the company.

In a research note to clients, the Wall Street watchers said they liked what they saw in Alibaba’s fiscal fourth quarter, even if adjusted earnings per share missed expectations by a penny a share. Alibaba’s stock was recently trading at $125.33, implying shares can climb an additional roughly 25%. (See more: Alibaba Misses Q4 Earnings Estimate, Beats Revenue.)

“Alibaba reported a strong March quarter highlighted by solid China retail commerce growth (41% y/y), continued cloud momentum (103% y/y), and positive monetization trends,” wrote the analysts in a note to clients covered by Barron’s. They said their new price target is based on expectations that the Chinese company will continue to see strength in its core ecommerce business, will continue to grow its cloud computing business AliCloud, strength will continue its core margins and improving gross margins will play out for its other units. (See also: Barclays Is Latest Bull to Praise Alibaba Group.)

Clouded Vision

Raymond James joins a growing list of Wall Street firms that are bullish on the China ecommerce player partly because of its core market but also because of efforts to expand into new areas and the successes it has been having so far. Take AliCloud: In its quarterly earnings report, Alibaba said that as of March, paying customers grew to 874,000, marking a roughly 109,000 increase from the last quarter and boosting revenue growth to 103%.

It said in its earning’s report that expanding the markets its cloud business plays in is a top priority. In its core ecommerce business, the company said annual active buyers in China reached 454 million, representing an increase of 11 million from the year earlier, while mobile monthly active users reached 507 million in March, and an increase of 14 million over December 2016.