Alibaba Group (Baba) plans to report its third quarter fiscal 2024 results before U.S. markets open on Wednesday, February 7, and will hold a conference call to discuss the results at 7:30 a.m. ET that same day. Things to note:
Analysts give a calm assessment of Alibaba: Last quarter, Alibaba reported second-quarter adjusted EPS of $2.14, above the consensus estimate of $2.11, and second-quarter revenue of $30.81 billion, roughly in line with the consensus estimate of $30.77 billion. reported. “Alibaba Group delivered a solid quarter characterized by renewed momentum and energy across multiple businesses as a result of our strategic realignment. As we embark on a new phase of development, we continue to strengthen our strategic focus and priorities. We have clearly defined our objectives. We remain entrepreneurial. We are committed to investing in growth and making bold decisions when necessary. More flexibility Through our organizational governance mechanisms, we aim to capture entirely new opportunities from the ongoing AI technology transformation and create more value for our customers,” said CEO Eddie Wu.
Additionally, the company said the expansion of U.S. export restrictions on advanced computing chips created uncertainty for Cloud Intelligence Group’s outlook. “We believe that a complete spin-off of Cloud Intelligence Group may not have the intended effect of increasing shareholder value. “Under the circumstances, we have decided to focus on developing a sustainable growth model for Cloud Intelligence Group,” Alibaba said in a statement.
In response to the report, Barclays said investors were disappointed by Alibaba’s cancellation of its widely anticipated cloud initial public offering, missing a short-term catalyst to unlock value. But with all the regulatory uncertainties in both the US and China, along with limited access to cutting-edge chips, it’s possible that it turns out to be the right decision in the long run. This is likely, analysts told investors in a research note. The company says its cloud business executives can now focus on building and growing the business rather than dealing with regulatory issues. We reiterated our overweight rating on Alibaba.
On the same day, BofA analyst Joyce Zhu lowered the company’s price target on Alibaba from $136 to $113, but maintained a “buy” rating on the stock. The group’s announcement to cancel its cloud spin-off and the Jack Ma family’s application to sell 10 million BABA ADRs came as a big surprise, analysts told investors in a research note. The stock trades at an attractive valuation of 8x and 7x expected FY24 and FY25 adjusted EPADS, giving the company the best exposure to benefiting from a potential bottoming in the Chinese economy, the company said. added.
November 30th, Morgan Stanley downgrades Alibaba Lowered price target from $110 to $90, from overweight to equal weight. The analyst blamed the company’s slow recovery in CMR and cloud, the exit of cloud spin-offs creating uncertainty in unlocking value through restructuring, and the lack of a catalyst for capital management without cloud diversification. He cited this as a negative development that weighs on his bullish theory. The analyst added at the time: P.D.D. Holdings (PDD) was a top pick in e-commerce in China.
Most recently, BofA analyst Joyce Zhu further lowered Alibaba’s price target to $106 from $113 and maintained a “buy” rating on the stock. The company estimates Alibaba’s third-quarter fiscal total revenue at RMB 261 billion, which would represent a 5% year-over-year increase. This slowdown from last quarter’s 9% year-over-year growth is primarily due to a decline in short-term revenue as Taobao Tmall shifts its focus to users, engagement, and orders rather than sales and profits during the strategy period. This is due to confusion. Transition period. The company has revised its FY24-26 revenue forecast to 2.2%, reflecting continued weakness in domestic consumer demand, Taobao Tmall’s long-term growth, AIDC’s global expansion, and investments in the AI potential of the cloud. %-4%, and the adjusted net profit outlook was lowered by 3%-12%. .
Meanwhile, Barclays last month lowered its price target on Alibaba to $109 from $138 and maintained its “overweight” rating on the stock. The analyst doesn’t think Alibaba’s near-term fundamentals will be the main driver for the stock price, and highlighted some potential catalysts and investor concerns in 2024. The company cited a decline in the group multiple as the reason for the decline in targets. Alibaba’s valuation is compelling, but patience is needed, analysts told investors in a research note.
Additionally, Mizuho lowered its price target for Alibaba from $120 to $100 and maintained its rating on the stock at “buy.” The analyst predicts that by 2024 there will be a “significant disconnect in consumer confidence levels” in the internet sector in the United States and China. In the U.S., moderate inflation and a tight labor market keep consumer spending resilient, benefiting top companies in sectors likely to gain share and drive profit growth, such as advertising, e-commerce and gig economy services. The company anticipates that it will bring about In China, we expect ongoing real estate issues and rising unemployment to continue to constrain consumer spending, even as savings rates hit record highs. Mizuho recommends investors be “aggressive” in the U.S. internet market and select companies with upside and long-term options against expectations.
Jack Ma told me to buy more: Jane Chan in November reported by bloomberg Alibaba co-founder Jack Ma has reversed plans to reduce his company’s stock after the company suffered its steepest decline in more than a year after reporting earnings results. Ma had planned to sell 10 million shares worth about $870 million, but the disclosure came at the same time the company scrapped plans to spin off its $11 billion cloud business. Although the announcement and quarterly results caused the market value of the company’s stock to drop significantly, Ma remains confident in the company’s future, the report said.
January 23, Andrew Ross Sorkin, Ravi Mattu, Bernhard Werner, Sarah Kessler, Michael J. de la Merced, Lauren Hirsch, Efrat Livni I wrote about it in the DealBook newsletter. Although Jack Ma has largely disappeared from public life, he has reportedly been buying up Alibaba shares in recent months, as has his longtime business associate and company chairman Joe Tsai. The report, citing people familiar with the matter, suggests that Ma and Tsai believe the business is undervalued. Mr. Ma bought $50 million worth of Hong Kong-traded shares in the quarter, and Ms. Tsai bought about $151 million worth of U.S.-traded Alibaba shares in the fourth quarter, according to people familiar with the matter. It added that it had been obtained.
consensus: Regarding its full December-end quarter results, analysts are calling for Alibaba to report total revenue of $36.74 billion. The consensus estimate for third-quarter earnings is $2.69 per share. Analyst consensus currently expects Alibaba to post earnings of $1.73 per share on revenue of $31.04 billion for the quarter ending in March, according to Refinitiv data.
Emotions: Check out Alibaba’s recent media buzz sentiment as measured by TipRanks.
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