Analysts at Citibank maintained a Buy rating on Alibaba (NYSE:BABA) despite lowering Q2 2024 and FY 2024-26 estimates. Although the multinational company has hit some revenue roadblocks, the analysts pointed to other aspects of its business offsetting those losses.
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According to the analyst, Alibaba is relatively on track with Citi’s and analysts’ revised estimates. While noting declining CMR (customer management revenue) and direct sales growth, the analyst predicts that revenue from the company’s cloud computing arm will offset the losses. Thus, based on these assumptions, the analyst revised Q2 2024 revenue and non-GAAP profit estimates by -4.5% and -10.5%, respectively.
Furthermore, Citi analysts revised their EBITA estimates for Alibaba based on the slower Taobao Tmall EBITA growth and reinvestment that has yet to yield results. Also, the analysts noted the higher-than-previously expected loss for international business and local services.
Looking forward to FY’2024-26, Citi lowered its new revenue expectations and non-GAAP NP by -2.8%/-6.5%, -3.7%/-7.6%, and -3.8%/-8.7%, respectively. While CMR is expected to pick up, the analysts chose to remain conservative.
Is BABA a Good Buy Now?
Turning to Wall Street, analysts have a Strong Buy consensus rating on BABA stock based on 17 Buys, one Hold, and zero Sells assigned in the past three months, as indicated by the graphic above. Nevertheless, the average price target of $142.06 per share implies a 68.33% upside potential.
