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Upping Our Fair Value Estimate Of Alibaba

Valuentum has raised its fair value estimate of Chinese e-commerce giant Alibaba (BABA) on account of the firm's stronger-than-expected earnings and faster pace of top-line expansion relative to our previous future forecasts.

Through the first nine months of its fiscal 2015 (ending March), Alibaba's revenue has expanded at a 45% year-over-year clip, thanks in part to strength in mobile, where sales expanded roughly 5-fold in the calendar fourth quarter. Non-GAAP EBITDA margins were an impressive 58% during the three months ended December 2014, and we expect profit margins to remain robust as expenses are scaled with robust revenue expansion. Through the first nine months of its fiscal 2015, Alibaba has generated RMB35.45 billion ($5.7 billion) and RMB31.4 billion ($5 billion) in cash from operations and free cash flow (CFO less capex). The firm's cash flow profile remains robust. Our five-year forecasts within our enterprise free cash flow (free cash flow… Read More …