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Why Alibaba Is Headed to $220

The Barclays duo expects Alibaba to report third quarter revenue growth of 54% year on year to CNY52.8 billion ($7.97 billion), which is 1.4% above consensus. In fast-growth areas, they expect the following: a 105% year-on-year increase in international retail and a 94% jump in the cloud business, as Alibaba invests in technology. From Alibaba's now-majority interest in its logistics service Cainio, they expect incremental revenue of CNY7 billion in the second half of fiscal 2018, versus CNY 5 billion in fiscal 2017.

Margins may be under pressure in the second half of 2018 as Alibaba increases investments in marketing, its Cainiao logistics business, subsidies, and user acquisitions, but according to Stifel Analysts Scott W. Devitt and Lamont Williams are in agreement that revenue in the fiscal second quarter is likely to come in slightly ahead of the consensus. Their target price on the stock: $190.

Here are five things the Stifel analysts expect investor to focus on in Alibaba's conference call Thursday:

(1) Alibaba’s integration of Cainiao / investments in logistics;
(2) promotional activity, particularly ahead of Singles’ Day [11/11];
(3) incremental updates on cloud;
(4) investments in the digital media business and reports that Alibaba is forming a new business group focused on online gaming; and
(5) details on Alibaba’s announcement that the company intends to ramp R&D spending to $15 billion over the next three years.

Alibaba shares, up 108% this year, were up 0.7% in recent trading, while the Guggenheim China Technology exchange-traded fund (CQQQ) was up 1.1% and the iShares Chnia Large-Cap ETF (FXI) was flat.

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