Youssef Squali of Cantor rates stocks in the Internet and Media sectors and is one of the top 100 analysts rated on TipRanks. Today, Squali came out with a brief commentary on the Chinese online retail giant Alibaba Group Holding Ltd (NYSE:BABA) and online retail giant Amazon.com, Inc. (NASDAQ:AMZN).
Alibaba Group Holding Ltd
Alibaba Group’s founder and Executive Chairman Jack Ma comment this week at the Stanford University Graduate School of Business on the U.S. and China economies. Ma said, “In the U.S. when the economy is slowing down it means people don’t have money to spend,” Furthermore, “You guys know how to spend tomorrow’s money or future money or other people’s money. China’s been poor for so many years, we put our money in the bank.” As such, Chinese consumers are relatively debt free and still have spending power, “The consumption is still going up healthily and aggressively,” Ma explained.
Squali noted, “The remarks were made during a public event in Silicon Valley and we view them to be broadly positive for the stock, particularly given that growth expectations for the company have been reset lower across the Street.”
Recent turmoil in the Chinese market has not changed Squali’s bullish view on the Alibaba stock because, “Alibaba is China’s dominant ecommerce player, and… this segment [is] far from maturing (growing middle class, inadequate retail infrastructure, strong cross border opportunity, etc.).” He explains, “Recent market turmoil appears to have had little impact on retail spending, which grew 10.5% Y/Y in July vs. 10.6% in June.”
Squali rates Alibaba Group shares a Buy, with a price target of $88, which represents a potential upside of 49.5% from where the stock is currently trading.
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, Squali has a total average return of 13.2% and a 54.4% success rate. Squali has a -32.4% average return when recommending BABA, and is ranked #56 out of 3755 analysts.
Out of the 33 analysts polled by TipRanks, 31 rate Alibaba stock a Buy, while 2 rate the stock a Hold. With a return potential of 66%, the stock’s consensus target price stands at $97.76.
Amazon said Thursday it will stop selling video-streaming devices from rivals Google and Apple that aren’t easily compatible with its video service, cutting off the Silicon Valley tech giants from a huge online marketplace to sell their newest Internet-connected TV hardware.
Squali commented, “While this may help generate incremental sales of the Amazon Fire stick, we view the move as an incremental negative for consumer selection. We note that this could also be a negotiating tactic by Amazon to pressure Apple and Google into making their devices more compatible with Amazon’s Prime Video Service.”
In addition, Amazon is piloting a new program called Amazon Flex, which uses independent contractors instead of UPS drivers to deliver goods to your home in less than an hour. Amazon Flex is currently under test in Seattle but is likely to be rolled out to other cities offering Amazon’s Prime Now service, which offers 1-hr delivery.
Squali noted, “We believe that the initiative can potentially help Amazon lower its delivery costs, given the overhead associated with full-time employees and owning a delivery fleet.”
Squali rates Amazon shares a Buy, with a price target of $670, which implies an upside of 29% from current levels. Squali has has a 29.2% average return when recommending AMZN, according to Tipranks.
Out of the 43 analysts polled by TipRanks, 37 rate Amazon stock a Buy, while 6 rate the stock a Hold. With a return potential of 14%, the stock’s consensus target price stands at $593.05.