J.P. Morgan Met With Alibaba And Is Still Bullish, Suning Partnership & Monetization Are Key

JP Morgan analysts Doug Anmuth, Alex Yao, Yong Wang and Binbin Ding recently met with Alibaba Group Holding Ltd BABA’s Vice President and Head of Investor Relations Jane Penner. Following the encounter, the firm reiterated an Overweight rating and $96.00 price target on the shares.

According to the note, the tone and content in the reunion was an extension of the latest earnings call. The experts and Penner discussed, among other issues, the recent investment and partnership with Suning, and mobile and desktop monetization.

The company believes the Suning business partnership is “critical as all parties are more fully vested than they would be in just a commercial investment,” the firm assures. Management highlighted three key components of the partnership:

1) Suning’s store on Tmall should help drive GMV in categories of strategic importance

2) The partnership will help expand Alibaba’s omni-channel strategy, especially in “categories where online/offline integration is more critical”

3) Logistics will be strengthened through Suning’s network, which could help reduce delivery times considerably (in occasions, to less than 2 hours).

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Management also remains optimistic about mobile monetization; mobile already accounts for 55 percent of GMV, and the company is only now staring to focus its monetization efforts on that area.

So, while in the near-term, “downward pressure on PC take rates is likely to continue,” Alibaba continues to think mobile monetization will surpass historical PC take rates over the longer term.