Alibaba Group Holding Limited (BABA) stock experienced a surge on Friday after several analysts revised their price forecasts upward following the company’s mixed fiscal first-quarter earnings report released on Thursday. The positive sentiment emerged amidst an overall upbeat earnings season, with several key analysts highlighting Alibaba’s performance and future potential.
Alibaba reported a 4% year-on-year increase in revenue for the first quarter of fiscal 2024, reaching $33.47 billion. This figure fell short of the $34.81 billion anticipated by analysts. However, the company’s adjusted earnings per American Depositary Share (ADS) of $2.26 surpassed the consensus estimate of $2.13. These results have sparked a flurry of analyst commentary and price target adjustments.
Citigroup analyst Alicia Yap maintained an “Overweight” rating for Alibaba and boosted the price target from $100 to $108. JP Morgan analyst Alex Yao echoed this sentiment, reiterating an “Overweight” rating and increasing the price target from $100 to $108. Bernstein analyst Robin Zhu, however, maintained a “Market Perform” rating while still raising the price target from $80 to $85. Baird analyst Colin Sebastian also remained optimistic, reiterating an “Outperform” rating and adjusting the price target from $85 to $88. Truist Financial analyst Youssef Squali maintained a “Buy” rating on Alibaba but lowered the price target from $110 to $100. Finally, Benchmark analyst Fawne Jiang reiterated a “Buy” rating on Alibaba with a price target of $118.
Truist Financial highlighted Alibaba’s sustained operational execution despite challenging macroeconomic conditions. The analyst noted a high single-digit year-on-year growth in Gross Merchandise Value (GMV), reflecting the stabilization of market share at Taobao and Tmall Group (TTG). This growth was fueled by increased order frequency. Squali acknowledged that fiscal 2025 remains an investment year across TTG, Alibaba International Digital Commerce Group (AIDC), and Cloud, which could keep margins in check in the near term. The analyst’s revised rating reflects expectations for growth in customer management revenue (CMR), improved traction at AIDC, and increased demand in Cloud. Squali anticipates that most money-losing segments will reach breakeven. He projected second-quarter revenue of $32.8 billion (231.0 billion Chinese yuan).
Benchmark analyst Fawne Jiang emphasized the positive impact of healthy GMV growth in the first quarter on Alibaba’s market share stabilization. This growth, however, came at a cost, widening the gap between GMV and CMR and contributing to the revenue miss. Despite this, Jiang believes that Alibaba has the potential to slow down or reverse its multiple contractions if CMR growth recovery materializes in the coming quarters. Jiang projected second-quarter revenue of 237.5 billion Chinese yuan.
In response to the positive analyst sentiment and earnings report, BABA shares rose by 5.68% to $84.06 at the last check on Friday. This surge reflects the market’s growing confidence in Alibaba’s ability to navigate a challenging environment and achieve sustained growth.
