Alibaba Group Holding Ltd (NYSE:BABA) reported another strong set of headline earnings, with results well above consensus expectations, including accelerating revenue growth, driven by ongoing strength in core commerce and continued diversification, with management also raising its FY17 revenue guidance as a result of the recently announced Cainiao consolidation.
Specifically, revenue in the fiscal second quarter, ending September 30, rose 61% to $8.285 billion, from $5.142 billion in the same period a year earlier, topping the $7.78 billion expected on average among analysts. In addition, the company posted adjusted earnings of $1.29 cents per share, beating consensus estimates of $1.04.
Alibaba CEO Daniel Zhang commented, “We had an outstanding quarter. Our consumer insights and technology innovation were the key drivers behind our customer value proposition across the Alibaba economy […] We are seeing the early results from our efforts to integrate online and offline with our New Retail strategy, and consumers have benefited from access to high quality products, improved customer experience and the tremendous convenience of shopping anytime, anywhere.”
Alibaba CFO Maggie Wu stated, “This quarter we delivered excellent results, with overall revenue growth of 61% demonstrating the robust momentum in our core commerce business and across the Alibaba economy […] We generated approximately US$3.4 billion in non-GAAP free cash flow during the quarter,1 which enables us to invest in our future growth areas of core commerce, including logistics, cloud computing, digital entertainment and other innovation initiatives.”
In reaction, Baird’s top analyst Colin Sebastian reiterates an Outperform rating on BABA with a $190 price target.
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Colin Sebastian has a yearly average return of 24.3% and a 76% success rate. Sebastian has a 49.9% average return when recommending BABA, and is ranked #18 out of 4702 analysts.
BABA has one of the best ratings by the Street. TipRanks reveals that BABA has a Strong Buy analyst consensus rating with 18 back-to-back buy ratings in the last three months. Meanwhile the average analyst price target of $202.25 suggests the stock still has upside potential of nearly 8% from the current share price for the next 12 months.