'Monetization Bottomed' At Alibaba, Nomura Upgrades

In a report published Friday, analysts at Nomura upgraded Alibaba Group Holding Ltd (NYSE: BABA) to Buy. The price target was raised from $119 to $137. The company has reached a monetization inflection point, and the analysts believe there is potential revenue upside in the next 3-5 years.The analysts expect the revenue upside to be driven by the Tmall/Taobao GMV mix. While Tmall GMV grew 62 percent, year-on-year in FY4Q15, the new head in charge of both Tmall and Taobao is expected to focus on accelerating Tmall's growth further.According to Nomura, "Favourable Tmall/Taobao mix change cannot only drive commission revenue growth but also online marketing revenues growth due to Tmall merchants' deeper marketing budget."Alibaba is expected to do better at mobile monetization than Baidu Inc (NASDAQ: BIDU), given the former company's mobile landing page is better in terms of quality, while eCommerce's advertisements have less of an impact on user experience and lead to better CTR than Baidu. The analysts expect Alibaba's mobile ad take rate to be on par with the PC levels by the end of 2018."Our channel checks suggest that GMV is recovering in Apr for both Taobao and Tmall. Furthermore, we expect JD to slow down starting from 2Q15, and thus expect Tmall to gain market share from JD again," the analysts added.