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Alibaba Q1 Reviewed By Jefferies, Price Target Raised To $103

Jefferies maintained its Buy rating on Alibaba Group Holding Ltd BABA 3.4% and raised its price target by $2 to $103 following the company's first quarter results that beat expectations on strong revenue growth and higher than expected margins.

"Mobile penetration and monetization witnessed meaningful improvement; Cloud delivered strong growth and could reach breakeven in NT," analyst Jessie Guo wrote in a note.

Mobile MAU rose 39.1 percent to 427 million and mobile monetization rate was 2.8 percent (+0.6ppt year-over-year), exceeding that for PC for the first time. Active customers grew 18 percent 434 million, while GMV improved 24 percent to RMB 837 billion.

In addition, the company reaffirmed its FY17 revenue growth guidance of 48 percent.

For the second quarter, Guo raised total revenue estimate by 0.4 percent to RMB33.9 billion, +52.9 percent year-over-year, driven by expectation of higher online marketing revenue via Taobao and Lazada.

The analyst kept the second quarter non-GAAP gross margin target unchanged at 64.8 percent, but increased non-GAAP net income forecast by 1.2 percent to RMB12 billion, an increase of 29.1 percent from last year.

For FY17, the analyst increased total revenue view by 1.3 percent to RMB151.9 billion, +50.2 percent year-over-year, slightly above management's FY17 full year revenue guidance of over 48 percent year-over-year growth.

The analyst reaffirmed FY17 non-GAAP gross margin forecast of 65.3 percent and increased non-GAAP net income view by 4.1 percent to RMB56.8 billion, representing an increase of 32.4 percent from FY16.

At time of writing, shares of Alibaba gained 3.41 percent to $94.91.

Aug 2016Goldman SachsMaintainsBuy
Aug 2016Brean CapitalMaintainsBuy
Aug 2016Raymond JamesUpgradesOutperformStrong Buy

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