Citi Raises Alibaba's Price Target To $133 Just Days Before Earnings Report

Citi’s Alicia Yap believes Alibaba Group Holding Ltd BABA will deliver marginally below consensus revenue when it reports Q2:17 results on November 2.

Yap maintains a Buy rating on the company, while raising the price target from $112 to $113.

Q2 Expectations

The analyst expects Alibaba to report total revenue growth of 51.7 percent year-on- year and 4.6 percent quarter on quarter to Rmb 33.6 billion, as compared to the consensus forecast of Rmb 33.9 billion.

The adjusted EBITDA is expected to grow to 32 percent year-on -ear to Rmb 14.7 billion, with a decline of 6.5 pps year-on-year in EBITDA margins to 43.8 percent.

“The yoy decline is attributable to dilution from Lazada and Youku consolidation while qoq decline mainly due to higher S&M assumption,” Yap mentioned.

The analyst estimated the non-GAAP net income for Q2:17 at Rmb 11.3 billion, marginally below the consensus expectations.

Focus Areas

According to the Citi report, the key focus areas during the earnings call will likely be “1) Monetization improvement and personalization effort; 2) Singles’ Day preparation and expectation; 3) cloud development landscape and recent pricing cut; 4) integration update on Youku and Lazada; 5) update on O2O, global and logistics services; and 6) consumer sentiment and macro environment.”