Summit Research Initiates Alibaba With Buy, $97 Price Target

In a report published Monday, Summit Research analyst Henry Guo initiated coverage of Alibaba Group Holding Ltd BABA with a Buy rating and a price target of $97.

Alibaba Group is a leading online and mobile commerce company in China. "We are positive on the eCommerce market in China and Alibaba’s favorable position in this rapidly growing market," Guo wrote.

In the report Summit Research noted its positive investment thesis as:

• Alibaba may continue its robust top-line growth over the next several years, considering the company's scale and market position, large user base and strong brand awareness, as well as continued internet and mobile penetration among consumers.
• "We consider the company’s strong margin profile an edge over its competitors as competition intensifies and companies in the space sacrifice profitability for top-line growth and market share gain," Guo said.
• There is significant potential of take rates improvement on Tmall.com longer term. International cross-border business can be expected to improve, as the global economy continues to recover and China becomes increasingly important as an international player.
• Ownership of Alipay and SMFS adds a call option to BABA shares. SMFS IPO a highly likely event over the next couple of years.

"We consider Alibaba a company with a rare combination of massive scale, strong growth and high margin in the global internet space," Guo added.