Alibaba Earnings Preview From Stifel, Firm Reiterates Buy

Alibaba Group Holding Ltd’s BABA is scheduled to report earnings for the third quarter of fiscal 2015 on January 29, 2015 before the market open, and Stifel provided a preview, in a report published Monday morning. The firm expects strong results ahead of consensus expectations, with TMall and Mobile driving upside, and thus, reiterated a Buy rating on the stock, accompanied by a $115 target price.

Strong Financial Results

For F3Q:15, the firm estimates:

- China Retail Marketplace GMV of $127.7 billion

- Total revenue of $4,605 million, versus consensus expectations of $4,422 million

- Adj. EBITDA of $2,451 million, compared to consensus of $2,269 million

- Non-GAAP EPS of $0.81, against the $0.75 consensus.

According to the report, “this quarter there were two nationwide eCommerce promotional campaigns: Double 11 (Nov. 11 or Single’s Day) and Double 12

(Dec 12). We expect mobile GMV to reach 40% of total GMV, up from 36% one quarter ago. Recall that on Single’s Day, TMall’s total GMV topped RMB57.1 billion +63% y/y inclusive of mobile GMV of RMB 24.3 billion +354% y/y. Mobile was 43% of total GMV. Faster TMall GMV growth drives a higher mobile take rate.”

Some Other Highlights

Stifel’s report mentions a couple other growth drivers; namely, the decline in oil prices and some strategic investments. While the retail price of gasoline in China has dropped only about 20 percent, this benefited Alibaba Group in a way, mainly through B2B sites Alibaba.com and 1688.com.

Regarding investments, the research firm points out three major ones, placed in: “1) Israeli O2O (Offline to Online) Start-up Visualead which owns visual QR Code technology; 2) Kuadi Dache, China’s leading Mobile Taxi and business car booking app; and 3) AdChina, China’s leading digital marketing platform.”