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Alibaba Long

by SignalFactory   ·  May 12, 2021 | 09:12:36 UTC  

Alibaba Long

by SignalFactory   ·  May 12, 2021 | 09:12:36 UTC  

Alibaba Group Holding Limited (BABA) is set to report fourth-quarter fiscal 2021 results on May 13.

For the fiscal fourth quarter, the Zacks Consensus Estimate for earnings is pegged at $1.91 per share, indicating growth of 46.9% from the prior-year quarter’s reported figure.

The consensus mark for the same is pegged at $27.9 billion, which suggests growth of 17.9% from the year-ago quarter’s reported figure.

Alibaba’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 23.23%.

Factors to Consider:

Alibaba’s strong efforts to add value to consumers and sellers through the consumer segment, product enrichment, and platform innovations are expected to have driven growth in its e-commerce business in the to-be-reported quarter by driving its customer momentum.

Further, the infusion of advanced technologies along with increasing validation for Taobao and Tmall portals is expected to have been beneficial in the quarter to be reported. Moreover, the application of Big Data and AI into the company’s e-commerce platform is anticipated to have continued helping it in delivering enhanced customer experience.

Additionally, well-performing Lazada and Trendyolare likely to have aided the performance of Alibaba’sInternational commerce retail business in the quarter under review.

Also, the increasing number of paying members on the platform coupled with solid momentum across cross-border-related value-added services is expected to have contributed well to the International commerce wholesale business’s growth in the fiscal fourth quarter.

Apart from e-commerce, the company’s robust cloud segment is expected to have sustained its momentum in the fiscal fourth quarter on a growing number of paying customers and higher-than-usual spending by them.

Additionally, Alibaba has been building the online marketing inventory on both mobile and PC as well as recording higher monetization rates. This is expected to have boosted its profits in the quarter under discussion.

However, we note that the company has been spending heavily in new areas of core online retail business, including supermarkets, stores, new artificial intelligence, digital entertainment, and cloud computing businesses. These increased expenses are expected to get reflected in Alibaba’s fiscal fourth-quarter results.

Further, increasing competition from companies like Amazon AMZN and JD as well as the deceleration of growth in the e-commerce market — both domestically and internationally — are expected to have impacted its earnings in the soon-to-be-reported quarter.

Furthermore, Alibaba’s increasing regulatory concerns are anticipated to have been major headwinds in the fiscal fourth quarter.

What Zacks Model Says:

Alibaba has an Earnings ESP of +0.24% and a Zacks Rank #5, currently.

Stock to Consider:

Here is a company, which has the right combination of elements to post earnings beat this quarter:

Pure Storage PSTG has an Earnings ESP of +10.81% and a Zacks Rank of 2 at present.

Alibaba Long (Buy)

ENTER AT: 222.60

T.P_1: 231.20

T.P_2: 249.29

T.P_3: 267.55

T.P_4: 289.59

T.P_5: 310

T.P_6: 319.79

S.L: 205.59

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