Bernstein reiterated an Outperform rating and revised down the price target from $120 to $100 on Alibaba stock
In a research published yesterday, Bernstein restated an Outperform rating along with a new price target of $100 down from previous $120 on stock of Alibaba Group Holding Ltd. The sell side firm thinks that the Chinese company’s fundamentals look attractive despite near term volatility, according to Alibaba stock news.
Bernstein research notes that the company shares have tanked around 48% year to date based on number of issues including falling PC monetization, more than expected conversion to mobile, current economic chaos in China and margin pressure because of new investments. Though, the firm said that Alibaba’s fundamentals still look attractive and that these issues have caused in the share price being substantially mis-priced.
Analysts at Bernstein also anticipate monetization rates of retail in China to grow year-over-year in the upcoming quarters. They expect that this will make it to revenue progress rates that are significantly higher than GMV volume growth and the Street’s forecasts. The research firm thinks that this might be a significant catalyst for Baba stock.
Moreover, the equity research firm expects fiscal year 2017 revenues, non-GAAP EPS, and earnings before interest, taxes, depreciation and amortization to improve in the mid 20s perhaps faster. It also sees Alibaba gross merchandise volume as the most significant metric to measure company’s performance and forecasts that in fiscal year 2017, Baba’s revenues, earnings and EBITDA will grow approximately by 30%.
Apart from this, the analysts at Bernstein stated: “Alibaba’s margins will be determined in large part by management’s discretionary decisions vis-à-vis investments in new opportunities, such as cloud, mobile, O2O, media, international (both inbound into China and AliExpress), or in strengthening the core through improved logistics. We currently expect FY17 non-GAAP EBITDA margins of 49%, but would not be surprised if results were significantly different (plus or minus 200 bps), as management decides to invest more or less on new opportunities.”
Moreover, they believe that the e-commerce giant has several opportunities to knock on like international markets and cloud; these will revamp the future growth. It was also highlighted that such prospects aren’t revealed in the Street’s forecasts.
Along with this news, Alibaba Group is further spreading its wings and has found a new way to expand which is Sports. The e-commerce company, in an association with Yunfeng Capital and Sina Corporation and has started a new business venture known as Alibaba Group Sports.
Alibaba Group Holding Ltd. stock was down 0.02% to $63.82 at close of market on Thursday. The e-commerce giant’s market capitalization is $159.06 billion. The Chinese company has 52 week high and low stock price of $63.92 and $58, respectively, according to Alibaba stock analysis.