Following earnings announcements, Brean Capital analysts made changes to price targets on Chinese e-commerce giant Alibaba Group Holding Ltd (NYSE:BABA) and sportswear maker Under Armour Inc (NYSE:UA). Below are the changes along with current ratings and comments from lead analysts Fawne Jiang and Eric Tracy.
Alibaba Group Holding Ltd
Brean Capital’s Fawne Jiang reiterated a Buy rating on shares of Alibaba, while slightly reducing the price target to $96 (from $98), after the company reported solid FY3Q16 results with both revenue and non-GAAP EPS ahead of consensus expectations.
Jiang commented, “While GMV growth decelerated notably, we believe it reflects higher quality growth and is a natural transition given BABA’s scale and the life cycle of China ecommerce industry. In our view, BABA is evolving from a one-dimensional platform that bridges information between buyers and sellers to a multi-dimensional platform where merchants could do brand building, channel optimization and customer acquisitions/ management, which could command higher pricing with enhanced value propositions to both merchants and consumers.”
“As a result, we believe BABA could continue to improve its monetization going forward. Furthermore, pricing changes arguably offer more leverage, which could potentially offer additional upside to the bottom line. As such, we remain positive on BABA’s long-term growth outlook. We maintain our Buy rating on BABA stock and lower our TP to $96 as we fine tune our estimates,” the analyst continued.
According to TipRanks.com, a site that tracks and ranks analysts on their predictions, analyst Fawne Jiang has a yearly average return of 3.8% and a 44.7% success rate. Jiang has a -20% average return when recommending BABA, and is ranked #646 out of 3594 analysts.
Out of the 19 analysts polled by TipRanks in the last 3 months, 18 rate Alibaba stock a Buy, whereas only one rates the stock a Hold. With a return potential of 41.61%, the stock’s consensus target price stands at $95.94.
Under Armour Inc
In addition, Brean Capital’s Eric Tracy reiterated a Buy rating on shares of Under Armour, while raising the price target from $84 to $88, which represents a slight upside potential from current levels.
Tracy commented, “With very negative sentiment (many expected 4Q rev miss), rev upside and solid top-line 1H guide catalyzes a material relief rally in the shares. Pre-qtr, we believed UA maintained the levers to grow through seasonal domestic challenges – some low quality (FH stores, diluted domestic channels or int’l distributors) and some structurally legit. 1H rev guide of >25%, will be viewed positively (despite fact that 1) it’s partly liquidation driven and 2) inventory clearance will drag heavily on 1Q GM/EPS) as UA is typically conservative on initial guide.”
“Key questions for us going forward: 1) execution on SAP implementation/CF evolution, with new CFO; any chance for supply driven rev shortfall?, 2) fw growth is dilutive; can UA mitigate and does the market even care? and 3) multiple – does it hold or fade after yesterday’s share squeeze; will “unicorn” status (few legit +25%-30% rev growers out there) support sustained multiple? We slightly tweak ests; our TP goes to $88. As such, we are more aggressive buyers on pullbacks,” the analyst added.
According to TipRanks.com, analyst Eric Tracy has a yearly average return of 13.3% and a 62% success rate. Tracy has a 8.9% average return when recommending UA, and is ranked #135 out of 3594 analysts.
The overwhelmingly majority of analysts still say Under Armour is a “buy.” The average forecast is for the stock to hit $97 in the coming months.