Alibaba (BABA) PT Lowered to $115 at Evercore ISI; 'Buy' Maintained

Evercore ISI analyst Ken Sena lowered his price target on Buy-rated Alibaba (NYSE: BABA) to $115.00 (from $130.00) following earnings results. He said the lower take rate was a negative but just a temporary one.

Sena commented, "Alibaba’s better merchandise volumes, user growth and profitably this quarter all offer reason for investors to stay constructive. We also view the take-rate compression on revenue as something that will cycle as desktop & mobile take rates converge overtime and, on a blended basis, move higher even than where desktop sits today. Moreover, we suspect the concerns around the SAIC's counterfeit complaint as easing given that BABA has taken meaningful actions since July to address counterfeits, and it maintains that it received no notice on the issue outside of its standard discourse with SAIC before Wednesday. Nevertheless, while we continue to view the fundamentals as quite attractive, the uncertainty on how the SAIC complaint gets resolved and the timing is something we must recognize in shares. As such, on roughly similar estimates, we are trimming our target to $115 from $130."

For 4Q15, they are nudging GMV 1% to ¥671bn ($107.4bn), or 56% y/y, but on a blended take-rate of 2.0% vs. 2.2% previously, revenue falls 9% to ¥13.3bn ($2.1bn), or 42% y/y. On the stronger margins however, EBITDA of ¥8.7bn ($1.4bn) is basically unchanged, implying revenue margins of 49% vs. 45% previously. For FY16, revenue falls by 7% to ¥105.2bn ($16.8bn), or 37% y/y, on lower monetization, but EBITDA is again largely unchanged on an absolute basis at ¥58.5bn, or 56% of revenue.

For an analyst ratings summary and ratings history on Alibaba click here. For more ratings news on Alibaba click here.

Shares of Alibaba closed at $89.81 yesterday.

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