Alibaba Analysts Look For Signs Of Q4 Rebound: 'Cloud Business Could Record Double-Digit Growth In 2025'

Zinger Key Points
  • Alibaba reported double-digit Y/Y GMV growth, driven by “demand elasticity of price discounts,” one analyst said.
  • FY25 remains an investment year, which could keep margins in check in the near term, another analyst added.
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Shares of Alibaba Group Holding Ltd BABA remained volatile in early trading on Wednesday, after the company reported results for its fiscal fourth quarter.

The results came amid an exciting earnings season. Here are some key analyst takeaways.

  • Mizuho Securities analyst James Lee maintained a Buy rating, while reducing the price target from $95 to $92.
  • Truist analyst Youssef Squali reiterated a Buy rating, while cutting the price target from $113 to $110.
  • Benchart analyst Fawne Jiang reaffirmed a Buy rating and price target of $118.

Check out other analyst stock ratings.

Mizuho Securities: Alibaba reported "an encouraging quarter," with double-digit year-on-year growth in gross merchandise value (GMV), driven by "demand elasticity of price discounts," Lee said in a note. "China commerce margin was on track despite facing mix shift to lower-priced platform," he added.

The company's consolidated EBITA declined on a year-on-year basis mainly due to higher investments in international businesses and Cainiao, the analyst stated. He reduced the consolidated EBITDA estimate for fiscal 2025 by 7% to 195 billion RMB to reflect the investments.

Truist Securities: Alibaba's quarterly results reflected "good operational execution against an improving macro with a return to double-digit growth in GMV and orders at TTG (Taobao and Tmall Group)," Squali said.

China Commerce Retail, which accounts for around 40% of the company's revenues, recorded 3% year-on-year growth, driven by 5% CMR (advertising and commissions revenues) growth, he added.

The Cloud business could record double-digit growth in the back half of fiscal 2025, the analyst stated. "That said, FY25 remains an investment year which should keep margins in check NT," he further wrote.

Benchmark: Alibaba reported 7% year-on-year revenue growth, representing a "solid" beat, while profits came in lower than expected due to investments, Jiang said. "Double-digit y/y growth on F4Q GMV demonstrates early signs of a market share stabilization," he added.

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"The company is committed to invest to revitalize its growth in core businesses – TTG, Cloud and AIDC," the analyst stated. "With growth/user experience as a strategic priority, we acknowledge margin uncertainties in the coming quarters.”

BABA Price Action: Shares of Alibaba Group Holding had risen by 1.26% to $80.51 at the time of publication on Wednesday.

Image: Shutterstock

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Posted In: Analyst ColorAsiaEarnings MissesPrice TargetReiterationTop StoriesAnalyst RatingsMoversTrading IdeasBenchmarkChinae-commerceExpert IdeasFawne JiangJames LeeMizuho SecuritiesStories That MatterTruist SecuritiesYoussef Squali
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