Cantor Fitzgerald On Alibaba: Higher Investments To Fuel 'Outsized Growth And Margin Profiles'

Youssef Squali of Cantor Fitzgerald reiterated a Buy rating on Alibaba (NYSE: BABA) on Wednesday with a price target raised to $110 from a previous $90 following the company's second quarter results.“As expected, BABA's 2Q:FY15 results came in strong, particularly on the top line, with accelerating revenue growth, while the bottom lines were somewhat noisy with higher SBC, increase in amortization expenses and consolidation of newly acquired businesses,” Squali wrote. The analyst adds that he is not surprised that Alibaba refrained from issuing guidance given the fact that spending due to new initiatives and marketing will remain elevated.Nevertheless, Squali notes that Alibaba maintains a strong brand, unmatched scale, differentiated pricing model and perhaps most importantly an “unfair competitive advantage” relative to its peers both within and outside of China. As such, shares deserve a higher valuation over time given its “outsized growth and margin profiles.”Squali raised his full year fiscal 2015 guidance and now expects the company to see $12.626 billion in revenue, $7.0 billion in EBITDA and earn $2.36 per share. Previously the analyst forecasted the company to see $12.139 billion in revenue, $6.738 million in EBITDA and earn $2.30 per share.