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.”
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