Goldman Sachs Adds Alibaba (BABA) to Conviction Buy List
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(Updated - August 12, 2016 8:20 AM EDT)
Goldman Sachs upgraded Alibaba (NYSE: BABA) from Buy to Conviction Buy with a price target of $120.00 (from $104.00), implying upside of 31%. Analyst Piyush Mubayi noted better than expected Q1 results, and he expects continued top line growth.
"We add BABA to the Conviction List following better than expected 1QFY17 results, an even stronger growth/margin outlook and dominance across several businesses. Its recently articulated 10-year strategy also reinforces our bullish view on several legs of the long-term story. Growth in quarterly and China retail revenues were the fastest since its IPO (+59%/49% yoy) due to reaccelerating GMV growth and higher mobile monetization. As such, we increase 2016E-18E earnings by 8-17% and raise our 12-mth SOTP-based TP to US$120. As AWS is for AMZN, AliCloud has become an increasingly important value driver for BABA and continues to strengthen its ecosystem via ecommerce, cloud, payments, logistics and marketing," said Mubayi.
The analyst added, "Continued top line growth across key segments including ecommerce, payments, media and cloud in 2H2016. (2) AliCloud to be profitable in the next two years (based on AWS’s 29% margin this quarter) as it rolls out new products and features that will enhance its value proposition and drive higher ARPU. (3) Improving outlook for Cainiao and Ant Financial as infrastructure upgrades by express delivery partners will improve their fulfilment capabilities over the next 6-12 months."
Shares of Alibaba closed at $91.77 yesterday.
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Create E-mail Alert Related CategoriesAnalyst Comments, Analyst PT Change, Hot Comments, Hot Upgrades, Upgrades
Related EntitiesGoldman Sachs Conviction Buy List, Goldman Sachs, Earnings, IPO
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