Alibaba (BABA): The Flywheel Starts To Spin - Suntrust
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SunTrust Robinson Humphrey analyst, Bob Peck, reiterated his Buy rating on shares of Alibaba (NYSE: BABA) and raised his price target to $110.00 from $90.00 after the company reported a strong quarter and increased its financial disclosure.
Three key points for investors: 1) revenue growth accelerated, continuing to decouple from GMV. Engagement remains robust while ARPU from customers AND merchants increased. 2) Core Commerce profitability of 61% EBITA was better than expected. 3) Cloud grew 156% and narrowed its losses, with incremental margin of 28%.
The analyst raised his PT to $110 from $90 implying ~23x CY2018 EPS (~1x PEG).
Shares of Alibaba closed at $91.77 yesterday.
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