Alibaba's (BABA) March Quarter Seen as Challenge, Says Deutsche Bank

Deutsche Bank maintained a Buy rating on Alibaba (NYSE: BABA) with a price target of $98. Comments come ahead of Q4 results Thursday. Analyst Alan Hellawell III expects a challenged quarter due to sequential weakness on seasonal factors and anti-fraud measures.

"Redoubled efforts to combat fraud with stricter criteria imposed on Tmall and Taobao merchants, will likely drive down GMV QoQ, adding to usual seasonal Mar Q weakness," said Hellawell.

"We expect China retail GMV of RMB598b (+39%YoY/-24%QoQ). Blended take-rate should ease (-8bps) YoY due to continuing mobile adoption and lower tier market penetration. We expect a mobile take-rate of 1.69% (-+0.71ppt YoY, -0.27ppt QoQ), and PC take-rate of 2.46% (-0.17ppt YoY, -0.77ppt QoQ). We thus expect revs of RMB16.5b (+37%YoY/-37%QoQ) vs cons of RMB17b. We expect non-GAAP EBITDA of RMB7.8b (+14%YoY/-48%QoQ) vs cons of RMB8.6b, non-GAAP OP of RMB6.6b (+4%YoY/-52%QoQ) vs cons of RMB7.7b, and non-GAAP NP of RMB5.7b (-15%YoY/-57%QoQ) vs consensus of RMB7b," added the analyst.

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 $80.59 yesterday.

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