Brean Capital Slashes Price Target for Alibaba Group Holding Ltd on Back of Near-Term Headwinds

Brean Capital analyst Fawne Jiang weighed in today with a research report on Alibaba Group Holding Ltd (NYSE:BABA), reducing the price target to $97 (from $110), while maintaining a Buy rating on the stock. The decreased price target reflects the analyst reduced EPS estimates given more conservative projections for the coming quarters. With Alibaba shares last trading at $84.26, Jiang’s price target implies potential upside of about 15 percent.

Jiang noted, “We believe the company will continue to ride on secular ecommerce growth in China, particularly with mobile ecommerce now tapping into a broader demographic: consumers in lower tier cities. With mobile as a key growth driver going forward, we are positive on company efforts to improve its 1) advertising system by prioritizing relevancy and ultimately driving higher conversion and 2) ecommerce ecosystem by installing stricter policies to filter out lower quality merchants. We view these steps as critical to ensuring sustainable long-term growth. That said, we expect these recent adjustments to pressure monetization and therefore create some headwinds to nearer term growth.”

Furthermore, “We expect BABA to continue focusing on improving the user experience and merchant ROI. Healthy GMV growth will be a top priority in the coming quarters, with the take-rate seeing some pressure in the near term. As a result, we are reducing our EPS estimates to reflect more conservative assumptions for the coming quarters. We are consequently also lowering our TP to $97. Our TP of $97 represents 25x our FY2017 EPS estimate of $3.70 (w/$4.72 cash per share).”

According to, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Fawne Jiang has a total average return of 0.7% and a 44.6% success rate. Jiang has a -13.4% average return when recommending BABA, and is ranked #2195 out of 3572 analysts.

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