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Alibaba (BABA) PT Lowered to $115 at RBC Capital; 'Outperform' Maintained

January 30, 2015 7:59 AM EST
Get Alerts BABA Hot Sheet
Price: $73.52 +0.14%

Rating Summary:
    33 Buy, 8 Hold, 1 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 20 | Down: 14 | New: 22
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RBC Capital analyst Mark Mahaney lowered his price target on Outperform-rated Alibaba (NYSE: BABA) to $115.00 (from $130.00) following results yesterday that disappointed investors. While a monetization miss, the analyst said fundamentals are still strong.

Mahaney commented, "Revenue of 26.2B RMB came in above RBC @ 25.8B RMB but below Street @ 27.5B RMB. The major delta vs. Street was China Commerce revenue – GMV was in line, but monetization was lower and down 10% Y/Y (from 3.05% to 2.70%) due to ongoing Mobile mix shift & PC user experience experiments. Revenue miss would have been greater except for acquisition-influenced Other revenue beat. So this was a Low Quality Revenue Miss. EBITDA and EPS beat RBC and Street on better than expected opex controls, tho Gross Margin came in lower than expected."

Keys the quarter, according to the analyst: – 1) Strong & Steady Buyer Growth – 45% Y/Y growth in Active Buyers to 334MM (bigger than U.S. population) was consistent with prior trends; 2) Strong & Steady GMV Growth – 49% Y/Y was same or higher than prior 3 quarters and amounted to $127B; 3) Monetization Miss – Both Desktop & Mobile Take Rates (Retail Revenue/GMV) came in light vs. Street…Ad Revenue-supported ecommerce platforms (Alibaba) are inherently going to face greater Mobile transition risks than Retail Revenue-driven ecommerce platforms (eBay & Amazon)…and BABA & China are still in early days of ad optimization; & 4) Margin Pressure – Gross Margin of 71% was down 600 bps Y/Y, in part due to new investments (content) and acquisitions.

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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