Shares of Alibaba Group Holding Ltd (NYSE:BABA) are up more than 40% so far this year. Analysts believe that now is a good time to bet on Alibaba as the Chinese tech giant is set to report strong financial results for the quarter ended March 31.
The company’s stock has been performing well. In the morning session on Tuesday, the stock was trading up 1.53% to $123.26. During the last 12 months, BABA has surged over 55%. The stock has gained over 21% in the last three months.
The consensus average recommendation for Alibaba is ‘Buy,’ based on ratings from 45 analysts covering the Chinese internet company. The consensus average target price is $128.15 on the stock.
According to research firm MKM Partners, investors should buy BABA because the company’s earnings will beat Wall Street expectations, CNBC reported.
Alibaba Group Holding Ltd (NYSE:BABA) is set to report its financial results for the quarter and fiscal year ended March 31 before the market opens on Thursday, May 18.
“We are expecting strong results driven by solid GMV [gross merchandise volume] growth and continued monetization gains,” MKM Partners analyst Rob Sanderson said in a research report quoted by CNBC. “We continue to see considerable value in the SOTP [sum of the parts] and think that continued strength in commerce is the catalyst for unlocking value.”
What to Watch/Expect from Alibaba Q4 Earnings
Alibaba is expected to report revenue of $5.2 billion, up 48% in local currency from the year-ago quarter. Last quarter, the e-commerce giant reported revenue of around $7.7 billion, an increase of 54% year-over-year.
Three things to watch in Alibaba’s Q4’s earnings report are the company’s cloud computing; its digital media and entertainment business; and the company’s new retail strategy.
Last quarter, the Chinese e-commerce giant reported an 115% year-over-year growth in revenue from its cloud computing business to $254 million. Alibaba Cloud expanded its global presence with new data centers in Japan, Germany, the Middle East and Australia during the third quarter.
Alibaba is also betting on video streaming business. The company is investing millions in digital entertainment. “We maintained our competitive position in digital entertainment in China through a combination of licensed premium content as well as self-produced and joint-produced programming, achieving synergies across our entertainment platforms on both mobile and living room screens,” the company said in the third-quarter earnings report.
At the end of 2016, Alibaba Group Holding Ltd (NYSE:BABA) announced a new retail strategy to transform traditional retail business. The company has said that this retail strategy will enable it to tap into the entire $4.8 trillion retail sector in China by eliminating the distinction between online and offline commerce. As part of the new strategy, Alibaba is partnering with brick-and-mortar retailers to deploy its omni-channel solutions to create a better shopping experience for consumers.
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