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Shopping Day Madness! Why Investors Aren’t Crazy for Alibaba

" ... Based on the reported Singles Day growth, we remain comfortable with our 3Q18 (December quarter) China retail commerce revenue estimate of $9.44B (+54% y/y forex neutral). Alibaba reported
Singles Day growth of 39% y/y in local currency, an acceleration vs. 32% y/y growth in 2016. In 2016, Singles Day represented ~10% of total GMV in the December quarter. We reiterate our Strong Buy rating on Alibaba given:
1) continued strong core commerce revenue growth;
2) Cloud leadership;
3) our expectation for narrowing losses in investment areas (e.g., Digital Media); and
4) we believe valuation remains attractive at ~25x CY18 Core Commerce EPS (vs. ~40%+ organic Core Commerce growth in FY18) ..."

Two notable trends from Saturday's shopping festival: there was a 4x multiple of growth in the sale global brands, and strength in cross border trade as more and more Chinese shoppers use mobile devices, write SunTrust Robinson Humphrey analysts Youssef Squali, Naved Khan, Sagar Vachhani and Nathan Mitchell. This could mean China retail revenue growth for the fiscal third quarter ended in December of 45% year on year and overall revenue growth of 44% vs. 54% in the prior fiscal third quarter, "implying potential upside to estimates if this momentum is sustained," the analysts write. The SunTrust price target on Alibaba shares: $210.

As Barron's noted in a recent story, the stock to own today is (JD), whose shares are up nearly 5%. The Guggenheim China Technology ETF (CQQQ) is up 1.4% today. See our free post Second Fiddle to Alibaba Still Gets Play.