Could Alibaba Stock Hit $170?



Stock up 77% since last earnings report

Alibaba (BABA) stock has performed strongly so far in 2017, and analysts at Nomura see more upside in the stock. On June 14, 2017, Alibaba stock had gained more than 55.6% since the beginning of 2017 and more than 80.0% since the same date in 2016. On the same date, Alibaba stock was up more than 77.1% since the company reported its fiscal 4Q17 earnings on May 18.

According to a Barron’s report citing Nomura analyst Jialong Shi, Alibaba stock has the potential to hit $170.00, which implies a 25.0% upside from the stock’s current price. Nomura previously had a price target of $139.00 on Alibaba stock.

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Alibaba growth booster

Nomura is bullish on Alibaba for several reasons. It sees Alibaba’s recently unveiled data bank as a powerful tool that could drive sales on Alibaba’s marketplaces to generate more marketing and commission revenues for the company. As such, Nomura forecast that Alibaba’s marketing and commission revenues could increase 44.0% and 30.0%, respectively, in the current quarter.

In addition to the support from the new data bank tool that Alibaba has launched, Nomura also sees the company benefiting from China’s growing online retail and cloud computing markets. Without accounting for virtual goods and services, China’s National Bureau of Statistics noted that the country’s Internet retail sales growth accelerated to 30.0% in May from 24.0% in April.

Cloud revenues rose 103%

In the cloud sector, Nomura noted that Alibaba’s AliCloud continues to gain market share in China. Alibaba’s cloud revenues increased 103.0% year-over-year in fiscal 4Q17[1. fiscal 4Q17 ended March 2017] to ~$314.0 million, as shown in the chart above.

Alibaba is set to face stronger competition from Amazon (AMZN), Microsoft (MSFT), Alphabet’s (GOOGL) Google, and Oracle (ORCL) as it expands its cloud operations beyond China.


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