Alibaba (BABA) Earnings Preview: The Countdown Begins


Alibaba (NYSE:BABA) is slated to release its fiscal fourth-quarter earnings results on May 4 before the U.S. markets open. The Chinese firm’s stock marched steadily upward this week, as the Street counts down the days before the earnings release.

In a note to investors, Oppenheimer’s top analyst Jason Helfstein offered an Alibaba earnings preview. The analyst feels that the company’s continuing push toward e-commerce personalization via artificial intelligence and media integration will drive its growth, along with AliCloud and physical store exposure.

Helfstein opined, “F4Q:18 revenues expected to exceed Street estimates on performance of new retail (Hema and Intime) and international business (mostly Lazada), with lower margins, resulting in EBITDA in line with to modestly above Street. We are estimating Chine Commerce revenues +46% y/y vs. +47% in F3Q. While offline business is negatively affected by the Chinese New Year holiday (2/16-2/23), the impact is largely offset by new stores expansion (currently 35 stores in nine cities). Alipay will be a drag on higher promotional expenses. Mgmt may provide color on timing of Ant listing. AliCloud momentum should continue with growth +90% y/y or better (vs. 104% in F3Q). Investments around Digital/Entertainment & Innovations expected to increase q/q, with commentary on competitive dynamics in content and next-gen tech (AI, ML and autonomous vehicles). Mgmt may also discuss local stock listing, which we believe would benefit the stock price from local investor demand.”

Helfstein rates BABA shares an Outperform with a price target of $220, which implies an upside of 23% from yesterday’s closing price.

Helfstein’s picks have a 18.4% one-year average return with a 64% success rate, according to analyst ranking service TipRanks, placing him in the top 2 percent of all Wall Street analysts.

Overall, most analysts on Wall Streets are out rooting for this Chinese titan to be a winning stock pick, as TipRanks analytics showcase BABA as a Strong Buy. Based on 17 analysts polled in the last 3 months, all 17 rate Alibaba stock a Buy. The 12-month average price target stands at $235.19, marking a nearly 32% upside from where the stock is currently trading.

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