KeyBanc Stays Bullish On Alibaba After 2019 Guidance Cut
Chinese e-commerce company Alibaba Group Holding Ltd. (NYSE: BABA) reported second-quarter earnings Friday with updated revenue guidance for the year.
The Analyst
KeyBanc Capital Markets analyst Hans Chung maintained an Overweight rating on Alibaba and lowered the price target from $215 to $203.
The Thesis
Alibaba's decision to lower 2019 guidance revolves around macroeconomic uncertainty and the near-term impact from the transition to recommendation feeds, Chung said in a Sunday note. (See his track record here.)
“We believe these two factors have concerned investors, while the model could now be largely derisked," the analyst said.
Chung said he anticipates incremental monetization from the revamped Taobao in the long run.
“Though there could be some cannibalization to search traffic, we believe recommendation feeds could drive higher user engagement and better conversions and in turn result in more transaction sales, which will further drive more ad spending at merchants.”
KeyBanc remains bullish on Alibaba for three key reasons, Chung said:
- The monetization of its core e-commerce segment, which is expected to improve through technology advancements.
- The strong growth of AliCloud due to its leverage and position in the Chinese market.
- Growth-driving opportunities in rural e-commerce.
Price Action
Alibaba shares were down 0.55 percent at $146.78 at the time of publication Monday.
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Photo courtesy of Alibaba.
Latest Ratings for BABA
Date | Firm | Action | From | To |
---|---|---|---|---|
Jan 2021 | Bernstein | Initiates Coverage On | Market Perform | |
Jan 2021 | Truist Securities | Maintains | Buy | |
Jan 2021 | KeyBanc | Maintains | Overweight |
View More Analyst Ratings for BABA
View the Latest Analyst Ratings
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