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Alibaba's Stock Slides as Analysts Lower Price Targets after 'Satisfactory' Q3 2024 Earnings

By Don Francis, Editor
February 9, 2024 7:49 AM UTC
Alibaba's Stock Slides as Analysts Lower Price Targets after 'Satisfactory' Q3 2024 Earnings

Susquehanna's Shyam Patil lowered their price target on Alibaba (NYSE: BABA) by 10% from $150 to $135 on 2024/02/08. The analyst maintained their Strong Buy rating on the stock. Patil described Alibaba's Q3 2024 earnings report, released on February 7, 2024, as "satisfactory." The analyst noted that management is "keen on boosting" investment levels and focusing on top-line growth, particularly in its core businesses.

For Q3 2024, Alibaba reported earnings per share (EPS) of $2.67, which missed the Zacks Consensus Estimate of $2.73 and was down 2% year-over-year. The company's revenue for the quarter came in at $36.67 billion, missing the Zacks Consensus Estimate of $37.21 billion but still showing a 5% increase year-over-year. Notably, management did not provide financial guidance in its press release or earnings call.

Alibaba's CEO, Eddie Wu, commented on the quarterly results, saying, "We delivered a solid quarter as we are executing our focused strategies across the organization. Our top priority is to reignite the growth of our core businesses, e-commerce and cloud computing. We will step up investment to improve users’ core experiences to drive growth in the Taobao and Tmall Group and strengthen market leadership in the coming year. We will also focus our resources on developing public cloud products and sustaining the strong growth momentum in our international commerce business."

CFO Toby Xu added, "Alibaba Group delivered a healthy quarter with revenue growth of 5% year-over-year. We increased our investment in strategic priorities and improved shareholder return by leveraging our strong balance sheet and cash flow. Our board of directors approved an increase of $25 billion to our share repurchase program, demonstrating our confidence in the outlook of our business and cash flow. Our consistent share repurchase has also reduced outstanding share count while achieving EPS and cash flow per share accretion."

Following the release of the earnings report, other analysts also updated their ratings and price targets for Alibaba on February 8, 2024. JP Morgan's Alex Yao lowered their price target by 4.5% from $110 to $105 but maintained their Strong Buy rating on the stock. Goldman Sachs's Ronald Keung lowered their price target by 13.2% from $121 to $105, also maintaining their Strong Buy rating. Mizuho's James Lee lowered their price target by 5% from $100 to $95 while maintaining their Strong Buy rating.

It is worth noting that 100% of top-rated analysts currently rate Alibaba as a Strong Buy or Buy. No analysts see it as a Hold, and none recommend or strongly recommend selling the stock.

The consensus forecast among analysts is that Alibaba's upcoming year will deliver earnings per share (EPS) of $6.75. If the analysts' predictions are accurate, Alibaba's next yearly EPS will be up by 23.6% on a year-over-year basis.

Since Alibaba's latest quarterly report on February 7, 2024, the stock price has declined by 3.9%. Year-over-year, the stock is down 32.7%. During this period, Alibaba has been trailing the S&P 500, which has experienced a decline of 21.4%.

Susquehanna analyst Shyam Patil is ranked in the top 13% out of 4,469 Wall Street analysts by WallStreetZen. Patil specializes in the Communication Services and Consumer Cyclical sectors, among others, and has an average return of 6.8% and a 52.7% win rate.

Alibaba Group Holding Limited is a company specializing in e-commerce, retail, Internet, and technology. The company offers consumer-to-consumer (C2C), business-to-consumer (B2C), and business-to-business (B2B) sales services through web portals. Additionally, Alibaba provides electronic payment services, shopping search engines, and cloud computing services. The company is known for hosting the largest B2B (Alibaba.com), C2C (Taobao), and B2C (Tmall) marketplaces globally. Founded in 1999, Alibaba is headquartered in Hangzhou, China.

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