RBC Capital analyst Mark Mahaney provides commentary on shares of Alibaba Group Holding Ltd (NYSE:BABA) ahead of expected fiscal first-quarter results due this Thursday. Mahaney remains bullish on the stock, reiterating a Buy rating with a price target of $105, marking a 23% increase from where the stock is currently trading.

Mahaney forecasts Alibaba to bring in revenue of $26.4 billion RMB, right under the Street’s projection of $30 billion RMB. Additionally, Mahaney expects BABA’s earnings to reach the 48% margin of $12.6 billion RMB, just under the Street’s 44% margin of $13.2 billion RMB. The analyst anticipates adjusted earnings per share (EPS) of 4.56 RMB against consensus of 4.14 RMB. On June 14th‘s Analyst Day, Alibaba management offered guidance for the fiscal year of 2017 looking for organic revenue growth in the range of above 36% for year-over-year. For this current year, Mahaney projects adjusted EPS of $4.77 and EBITDA of $14.3 billion.

Mainly, ahead of the quarter, Mahaney is keeping his eyes on gross margins, especially because over the last six quarters, Alibaba has seen declines. However, Mahaney believes the global e-commerce company has reached an inflection point of Mobile Monetization, meaning the company will be able to not only reach, but sustain premium growth rates in key retail, with no limits in sight. Mahaney reiterates a bullish stance due to Alibaba’s continued demonstration of strong profitability.

Mahaney explains, “China Macro is a concern, but Internet Secular trends can offset much of this. Cloud Computing is small for BABA, but showing great growth. We still view BABA as a Premium-Growth/Premium-Profit Asset, with a very reasonable valuation. We also view this as a very effective management team with a sound l-t strategy. Finally, we see BABA as having significant option value in terms of non-retail/platform revenue streams in China, possibly International expansion & a series of major strategic investments.”

As usual, we like to include the analyst’s track record when reporting on new analyst notes to give a perspective on the effect it has on stock performance. According to TipRanks, top five-star analyst Mark Mahaney has achieved a high ranking of #7 out of 4,105 analysts. Mahaney solidly upholds a 67% success rate while yielding 20.3% in his annual returns.

TipRanks analytics exhibit BABA as Strong Buy. Based on 20 analysts polled by TipRanks in the last 3 months, 18 rate a Buy while 2 maintain a Hold. The consensus price target stands at $101.66, marking a nearly 20% upside from where the shares last closed.

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