Alibaba stock on Thursday moved up for a third straight day as it rebounds from a 17-month low. Alibaba earnings for its fiscal second quarter are due to arrive before the market open Friday.
XEstimates on Alibaba earnings suggest a slowdown in the company's overall performance. Investors have turned more negative on China Internet companies due to economic, regulatory and currency concerns.
Analysts expect Alibaba (BABA) to report an adjusted profit of $1.06 per share. That's down 18% from the year-ago period and its first quarterly decline in 10 quarters. Analysts estimate revenue of $12.45 billion, up 50% and its slowest growth in six quarters, for its fiscal second quarter. The company is China's largest provider of e-commerce services.
On Monday, Nomura analyst Jialong Shi lowered his price target on Alibaba to 202 from 224 but maintained a buy rating. Shi said concerns circling Alibaba earnings include a softening of China retail sales in recent months.
"In light of China's softening macro and retail market data, we would not be surprised if guidance is revised down eventually," Shi wrote in a note to clients.
Optimistic On Alibaba Stock
In his own research note, Baird analyst Colin Sebastian said he was optimistic about Alibaba's growth prospects.
"We note e-commerce growth statistics suggest a slight deceleration in growth, while macro concerns around the impact of U.S. tariffs remain an overhang," Sebastian wrote.
He went on to say: "Despite these potential headwinds, we are optimistic about the company's long-term growth trajectory, as investments in New Retail, Cloud Computing, and Digital Media catalyze further market growth and share gains."
Sebastian has an outperform rating on Alibaba stock and price target of 215.
Alibaba stock closed at 151.25, up 6.3% on the stock market today. On Wednesday, Alibaba stock closed at 142.28, up 4.4%. Since hitting a 17-month low of 130.06 on Tuesday, Alibaba stock is up 16%.
Concerns Over Investments
Oppenheimer analyst Jason Helfstein recently cut his price target on Alibaba stock. It was based on concerns about slower revenue growth and the impact of aggressive investments.
Alibaba is investing heavily in physical stores, delivery services, and digital media and entertainment, as well as cloud computing.
Helfstein reduced his target on Alibaba stock to 210 from 230. But he maintained an outperform rating, as Helfstein expects trade war rhetoric to subside after the midterm elections.
He also expressed concern that Alibaba's update to its Taobao Marketplace may delay monetization improvements. Taobao is a consumer-to-consumer e-commerce site and the largest online shopping marketplace in China.
Several other Wall Street analysts expressed similar concerns about the e-commerce giant when they recently cut their price targets on Alibaba stock.
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The post Alibaba Stock Rebounds Ahead Of Quarterly Earnings Report appeared first on Investor's Business Daily.
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