Analysts weigh in with their thoughts on internet giant Alibaba Group Holding Ltd (NYSE:
Alibaba Group Holding Ltd
Other recent efforts to enter new markets include the acquisition of the Chinese “YouTube,” Youku Tudou, as an example. As a result of the acquisitions, the analyst increased his FY2017 revenue and EPS estimates for the company. Furthermore, the analyst believes Alibaba is taking a step in the right direction by entering the cloud market, and increases his F2018 revenue and EPS estimates.
Sebastian points to “core growth initiatives in Digital marketing, local services, rural chain, globalization, and big data/cloud services” as the main takeaways of Investor Day. According to Sebastian, Investor Day updates on secular trends, company growth strategies, and capital allocation plans represent a “positive step towards improving investor sentiment.” Overall, the analyst believes Alibaba’s efforts to enter new markets will benefit the company in the long term. He explains, “We believe that the data and technology-first orientation is appropriate for a company that has a complex network of businesses and a broad range of long-term goals.”
The analyst maintains an Outperform rating on the company with a $94 price target. He explains, “Despite ongoing mixed sentiment on shares, largely due to China macro issues, we remain constructive on Alibaba given an increasingly diverse business with multiple long-term growth opportunities in retail, cloud, media, and logistics.”
Colin Sebastian is ranked #33 out of 3,971 analysts on TipRanks. He has a 67% success rate recommending stocks with an average return of 14.8% per recommendation.
According to TipRanks, out of the 17 analysts who have rated BABA in the past 3 months, all gave a Buy rating. The average 12-month price target for the stock is $99.46, marking a 29% upside from current levels.
Piper Jaffray analyst
The analyst also comments on the first upgrade cycle for Blaze and Alta, which comprise 47% of the company’s sales. Murphy predicts a shift away from older products as customers embrace the new. Furthermore, she adds, “New products are providing consumer repurchase metrics along with other data points, and allows the ability to strategically market,” as 40% of Blaze and Alta sales come from existing customers.
Murphy and Zerella also discussed guidance. Management maintains Q3 guidance, marked by lower sales, “as the channel destocks to make room for new launches in Q4.” However, Q4 sales are expected to surpass Q3. Similarly, gross margin is expected to increase as old products are phased out and “new devices begin to represent a larger portion of the mix.” In addition to expected increase sales, the analyst attributes higher ASP and improved quality to better gross margin guidance, noting an expected decrease in warranty expenses. However, the analyst warns that SG&A expenses will increase “significantly” in both Q2 and Q3 as the company upgrades its purchase displays in over 50,000 international locations.
Finally, the analyst highlights Zerella’s desire to position Fitbit as a digital health product. The company is exploring ways to increase its presence in corporate wellness (10% of revenues) and is hiring people with a background in healthcare to advise the company on how to proceed in this category.
The analyst reiterates a Neutral rating on Fitbit shares with a $16 price target.
Erinn Murphy has a 40% success rate recommending stocks with an average loss of (6.4%) per recommendation.
According to TipRanks, out of all the analysts who have rated Fitbit in the last 3 months, 65% gave a Buy rating while 35% remain neutral. The average 12-month price target for the stock is $22.71, marking an 82% upside from current levels.