Brean Capital Cuts Price Target on Alibaba (BABA) to $92 Following 1Q16 Results
Brean Capital maintained a Buy rating on Alibaba (NYSE: BABA) and cut the price target to $92.00 (from $97.00), following the company's 1Q16 earnings report. Revenue came in at RMB 20.2bn (+28% YoY), below consensus estimates of RMB 20.9bn. Adjusted EPS came in at $0.59, beating consensus by one penny.
Analyst Fawne Jiang commented, "BABA printed soft FY1Q16 results, largely driven by factors short-term/one-time in nature, whether it was the suspension of the lottery business, SME loan revenue transfer to Ant Financial, or promotional pricing cut on Juhuashuan. The company continues to build its mobile platform with robust mobile growth on both GMV and take rate. While the blended rate was down YoY, it was a combination of fast mobile growth and lower mobile monetization on back of an adjustment on PC ads. As the mobile platform continues to improve with increasing monetization (company is currently testing an ad load increase), we expect the mobile take rate to close the gap with PC, helping to drive the overall take rate down the road. Furthermore, the company is committed to building its logistic network, expand its local and international
reaches, as well as invest in new initiatives to drive sustainable growth. While we expect to see some margin pressure from stepped up investment in new business initiatives, we believe these efforts should benefit the company in the long run. We remain positive on BABA’s long-term growth outlook despite near-term headwinds. We maintain our Buy rating and have lowered our TP of $92 (from $97) which reflects our more conservative estimates."
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Shares of Alibaba closed at $73.38 yesterday.