Alibaba Analyst: Co. Has Near-Term Questions, 'Bullish' Long-Term View

In a report published Monday, MKM Partners analysts maintained a Buy rating on Alibaba Group Holding Ltd (NYSE: BABA), while reducing the price target from $125 to $115. The company is scheduled to report its results on Thursday. Increased efforts to remove counterfeit goods would have a significant impact on GMV in the current quarter. There is likely to be a "more severe deceleration" in GMV growth to 40 percent, versus 45 percent previously. Entities selling counterfeits are unlikely to be paying Alibaba for marketing services and there will be "negligible impact" to revenue.In the report MKM Partners noted, "Quality improvements at large scale auction-based buying platforms like Google Inc (NASDAQ: GOOGL) often lead to short-term fluctuations in monetization but lead to higher future monetization. This creates near-term uncertainty, but does not change the long-term thesis, in our view."The adjusted diluted EPS estimates for 2015 and 2016 have been reduced from $2.20 to $2.15 and from $2.89 to $2.70, respectively.Alibaba's stock is among the worst performing stocks in the sector, down 18 percent since the company's last report versus an 8 percent rise in the NASDAQ. "We think the confluence of a major lock-up expiration, a monetization back-step and reports of fraudulent activity by some merchants have elevated investor concern. An earnings miss is widely expected, in our view. We believe all are transitory issues and see significant upside as they cycle through," the analysts wrote.