Market Overview

Here's Why Baird Is Impressed With Alibaba

Here's Why Baird Is Impressed With Alibaba

After Alibaba Group Holding Ltd (NYSE: BABA) delivered a beat for the first quarter of fiscal 2018, Baird analysts are recommending investors “add to positions.”

The e-commerce giant reported a Q1 adjusted EPS of $1.17 against a 93-cent estimate and sales of $7.403 billion against a $7.13 billion estimate before the open Thursday.

The company said it has 466 million annual active consumers and 529 million mobile monthly active users, an increase of 22 million year-over-year.

Baird reiterated an Outperform on Alibaba and raised its price target from $170 to $190.

“Alibaba’s scale, consumer data and technological sophistication provides significant competitive advantages that will become even more pronounced going forward, in our view, as AI/personalization technologies are further refined,” analyst Colin Sebastian said in a note.

Alibaba CEO Daniel Zhang said technology is driving growth in the company’s business and strengthening its position beyond core commerce.

“We are excited about the future as we continue to innovate and drive synergies among the businesses throughout the Alibaba ecosystem,” Zhang said in a statement.

Strong Commerce, Mobile Engagement, Free Cash Flow Numbers

Alibaba’s revenue growth was driven by “continued strength” in core commerce, up 58 percent year-over-year, and mobile engagement that increased 24 percent year-over-year, Sebastian said.

The company’s cloud services segment was up 96 percent year-over-year, the analyst said.

“Core commerce outperformance was driven by ‘robust’ growth in spend per merchant and historic highs in number of paying merchants.”

Free cash flow generation at Alibaba amounted to 44 percent of revenue in Q1, Sebastian said.

The Baird analyst projected that reinvested profits “will continue to drive segment revenue growth at or above the consolidated [fiscal 2018] guidance range of 45-49 percent” and provide capital for Alibaba’s growth initiatives.

International Expansion

Alibaba’s international business grew 136 percent year-over-year as a result of the factory-direct marketplace AliExpress and the acquisition of Lazada, Sebastian said. Alibaba announced in July it was investing $1 billion in the southeast Asian retailer.

Benzinga reported last month that Alibaba was launching an online network to pair businesses with merchants on the Taobao marketplace.

The Taobao Global U.S. Merchants Network will link small- and medium-sized businesses in the U.S. with the sales potential of the more than 500 million consumers who use Alibaba’s platforms, according to the company.

Related Links:

Alibaba Links Entrepreneurs With China, A Market Jack Ma Says Can't Be Ignored: 'You Will Miss The Future'

The Business Philosophy Of Jack Ma

Latest Ratings for BABA

Sep 2019ReiteratesBuy
Aug 2019MaintainsOverweight
Aug 2019Initiates Coverage OnBuy

View More Analyst Ratings for BABA
View the Latest Analyst Ratings

Posted-In: Baird Colin SebastianAnalyst Color Earnings News Price Target Analyst Ratings Best of Benzinga


Related Articles (BABA)

View Comments and Join the Discussion!

Latest Ratings

PNRJefferiesInitiates Coverage On
IPHIBank of AmericaMaintains80.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Trading Daily
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at

Applied Materials Surrenders Some Early Gains After Q2 Beat

Ross Stores Attempts To Hold Gains From Q2 Beat