These Analysts Boost Their Forecasts On Alibaba Following Q1 Results

Alibaba (BABA) reported better-than-expected Q1 revenue of $34.57 billion, a 2% year-over-year increase, or 10% on a like-for-like basis, surpassing consensus estimates. While adjusted earnings per share of $2.06 missed analyst projections, the strong top-line performance, driven by a focus on consumption and AI + Cloud as highlighted by CEO Eddie Wu, led to a 1.5% rise in shares and prompted multiple analysts to raise their price targets, indicating positive market sentiment despite the mixed financial metrics.

Analysis

Alibaba Group Holding (BABA) reported a mixed first quarter, characterized by a revenue beat but an earnings miss. The company posted quarterly revenue of $34.57 billion, exceeding the consensus estimate of $34.26 billion and representing a 2% year-over-year increase. Critically, on a like-for-like basis excluding the impact of divested businesses Sun Art and Intime, revenue growth was a more robust 10%, suggesting solid underlying performance in core operations. This top-line strength, which CEO Eddie Wu attributed to a strategic focus on consumption and AI + Cloud, was offset by adjusted earnings per ADS of $2.06, which fell short of the $2.13 analyst consensus. Despite the earnings shortfall, the market reacted positively, with shares rising 1.5%. This positive sentiment was reinforced by sell-side analysts, with B of A Securities, Mizuho, and Benchmark all maintaining buy-equivalent ratings while raising their price targets to $152, $159, and $195, respectively, signaling strong conviction in the company's growth trajectory.

Key Decisions for Investors

• Investors should look past the headline earnings miss and focus on the 10% like-for-like revenue growth, which indicates solid momentum in Alibaba's core operations.
• The uniform upward revisions of price targets from multiple analysts suggest a bullish consensus on the company's strategy; the current price could be viewed as an attractive entry point relative to these new targets.
• Monitor future earnings reports for progress in the AI + Cloud and quick commerce segments, as management has identified these as key growth drivers and their performance will be critical to validating the current optimistic outlook.