Both analysts have Overweight ratings on the stock, with Zhao maintaining his previous rating and setting a $175 price target and Yao initiating coverage and seeing Alibaba at $190 (check out Zhao and Yao‘s track records).
Notable Bullish Remarks
“We believe Alibaba’s core commerce is expanding from traffic monetization to data monetization and such trend will quickly expand to its media/cloud businesses. Such expansion not only allows Alibaba to tap into non-transaction-based corporate budget but also supports our investment thesis based on sustainable revenue/earnings growth,” Yao said.
Zhao specifically highlighted how shocking it is for Alibaba to come out and provide a huge revenue guidance number (45–49 percent).
“The range implies accelerated organic growth for core e-commerce in FY18 (ex-Intime), attributed to Taobao’s personalized marketing, Tmall Supermarket, and the incremental contribution from New Retail related initiatives,” he noted.
Alibaba’s Accelerating Core Business
Yao continues to see Alibaba grow across its core e-commerce business, specifically highlighting how the site is able to drive monetization. Zhao credits this growth to Alibaba offering a larger range of digital services, improving user engagement and monetization, and digitalization.
“We believe all these trends suggest Alibaba’s domestic e-commerce platform continues to create value to consumers and merchants. Such value creation will continue to translate to sustainable revenue growth,” Yao noted.
In particular, both analysts highlighted how Alibaba could drive upside through monetization (which is very high-margin) as the company begins to utilize non-transaction budgets.
Overall, even as Alibaba stock continues to surge, up over 90 percent over the past year, Barclays and JPMorgan see a whole lot to like from Alibaba going forward.