In a research report released today, Cantor analyst Youssef Squali reiterated a Buy rating on shares of Alibaba Group Holding Ltd (NYSE:BABA) and reduced the price target from $110 to $95, which represents a potential upside of 29% from where the stock is currently trading. The decreased price target comes in response to company’s fiscal first-quarter financial results, which were mixed, according to the analyst.
Squali observed, “We are maintaining our positive long-term bias on BABA based on the company’s strong position within China’s rapidly growing commerce segment and potential for success outside of China. 1Q:FY16 results were mixed, driven by strong growth in mobile commerce, offset by the suspension of the Lottery business and the transfer of the SME loan business. User growth, while still healthy, slowed vs. expectations. We expect Alibaba to continue to dominate the rapidly growing Chinese ecommerce market for years to come, but we also believe that nearterm predictability of growth and margins has deteriorated given the macro backdrop in China.”
“F1Q was a mixed quarter of growth, with revenue below consensus while EPS was ahead of expectations (FactSet). Revenue was $3,265M (+28% Y/Y) vs. consensus’ $3,381M, while adjusted EPS of $0.59 topped consensus’ $0.57. EBITDA of $1,707M was below consensus’s $1,723. We note that excluding the suspension of lottery sales, and transfer of the SME loan business to Ant Financial, revenue growth would have been 36%.”, the analyst added.
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Youssef Squali has a total average return of 20.0% and a 61.2% success rate. Squali has a -15.3% average return when recommending BABA, and is ranked #19 out of 3731 analysts.
Out of the 31 analysts polled by TipRanks, 29 rate Alibaba Group stock a Buy, while 2 rate the stock a Hold. With a return potential of 45.9%, the stock’s consensus target price stands at $107.21.