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Alibaba (BABA) Hits 52-Week High on Solid Growth Prospects
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Shares of Alibaba Group Holding Limited (BABA - Free Report) touched a new 52-week high of $99.67 on Sep 2, eventually closing at $99.25. The company returned 55.3% in the past one year and has added roughly 22.1% year to date. Average volume of shares traded over the last three months was approximately 14,541K.
What's Driving Alibaba?
Alibaba Group is a Chinese e-Commerce giant which caters mainly to its native market. We continue to believe that Alibaba’s dominance in the mobile commerce market, its continued efforts to develop new products, international growth opportunities and growth initiatives incloud and media will spur growth.
The price appreciation may be attributed to Alibaba’s strong fundamentals, solid growth of its cloud business and better-than-expected first-quarter fiscal 2017 (ended Jun 30, 2016) reported on Aug 11. Since then, the share price has risen more than 8%.
In the fiscal first quarter, Alibaba’s earnings of 52 cents per share exceeded the Zacks Consensus Estimate of 38 cents. Earnings also increased 52.9% from the year-ago quarter. Strong growth in users and solid increase in sales in the cloud-computing segment played a major role in boosting Alibaba’s earnings.
Also, revenues climbed nearly 59% year over year to 32.15 billion yuan ($4.84 billion), the highest increase since its public offering. Revenues were also above our consensus estimate of $4.5 billion.
We believe Alibaba is progressing well on its mobile shift and continues to dominate the Internet e-commerce market in China. Also, the company remains focused on developing rural business, international expansion, logistics’ synergies and branching into high-growth areas like cloud computing, which is still nascent in China.
In the last reported quarter, mobile revenues shot up 119% to $2.64 billion and accounted for 75% of China’s commerce retail revenues. The company’s cloud revenues grew 156% year over year to 1.2 billion RMB, with paying customers growing 119% to 577K. Moreover, losses narrowed significantly, so the business is likely to turn profitable soon.
Another area of potential growth is the company’s growing media business, one that it has supplemented with a number of acquisitions. Late last year, the e-commerce giant agreed to acquire Chinese Internet TV platform Youku Tudou Inc. in an all-cash transaction. The deal will giveAlibaba access to about 570 million online video users, helping it to deliver American films and drama series to the Chinese audience, thereby ramping its penetration into the Chinese digital media market.
Moreover, the Zacks Consensus Estimate for earnings jumped 28.6% for full-fiscal 2017. Additionally, the company delivered an average positive earnings surprise of 3.13% in the trailing four quarters backed by its robust business portfolio.
Some well-placed stocks in the technology space are Autobytel Inc. and Stamps.com Inc. , sporting a Zacks Rank #1 (Strong Buy), and PetMed Express, Inc.(PETS - Free Report) , carrying a Zacks Rank #2 (Buy).
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Alibaba (BABA) Hits 52-Week High on Solid Growth Prospects
Shares of Alibaba Group Holding Limited (BABA - Free Report) touched a new 52-week high of $99.67 on Sep 2, eventually closing at $99.25. The company returned 55.3% in the past one year and has added roughly 22.1% year to date. Average volume of shares traded over the last three months was approximately 14,541K.
What's Driving Alibaba?
Alibaba Group is a Chinese e-Commerce giant which caters mainly to its native market. We continue to believe that Alibaba’s dominance in the mobile commerce market, its continued efforts to develop new products, international growth opportunities and growth initiatives incloud and media will spur growth.
The price appreciation may be attributed to Alibaba’s strong fundamentals, solid growth of its cloud business and better-than-expected first-quarter fiscal 2017 (ended Jun 30, 2016) reported on Aug 11. Since then, the share price has risen more than 8%.
In the fiscal first quarter, Alibaba’s earnings of 52 cents per share exceeded the Zacks Consensus Estimate of 38 cents. Earnings also increased 52.9% from the year-ago quarter. Strong growth in users and solid increase in sales in the cloud-computing segment played a major role in boosting Alibaba’s earnings.
Also, revenues climbed nearly 59% year over year to 32.15 billion yuan ($4.84 billion), the highest increase since its public offering. Revenues were also above our consensus estimate of $4.5 billion.
We believe Alibaba is progressing well on its mobile shift and continues to dominate the Internet e-commerce market in China. Also, the company remains focused on developing rural business, international expansion, logistics’ synergies and branching into high-growth areas like cloud computing, which is still nascent in China.
In the last reported quarter, mobile revenues shot up 119% to $2.64 billion and accounted for 75% of China’s commerce retail revenues. The company’s cloud revenues grew 156% year over year to 1.2 billion RMB, with paying customers growing 119% to 577K. Moreover, losses narrowed significantly, so the business is likely to turn profitable soon.
Another area of potential growth is the company’s growing media business, one that it has supplemented with a number of acquisitions. Late last year, the e-commerce giant agreed to acquire Chinese Internet TV platform Youku Tudou Inc. in an all-cash transaction. The deal will giveAlibaba access to about 570 million online video users, helping it to deliver American films and drama series to the Chinese audience, thereby ramping its penetration into the Chinese digital media market.
Moreover, the Zacks Consensus Estimate for earnings jumped 28.6% for full-fiscal 2017. Additionally, the company delivered an average positive earnings surprise of 3.13% in the trailing four quarters backed by its robust business portfolio.
Alibaba currently carries a Zacks Rank #3 (Hold).
ALIBABA GROUP Price and Consensus
ALIBABA GROUP Price and Consensus | ALIBABA GROUP Quote
Stocks That Warrant a Look
Some well-placed stocks in the technology space are Autobytel Inc. and Stamps.com Inc. , sporting a Zacks Rank #1 (Strong Buy), and PetMed Express, Inc.(PETS - Free Report) , carrying a Zacks Rank #2 (Buy).
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>