- Benchmark analyst Fawne Jiang reiterated a Buy on Alibaba Group Holding Limited (NYSE:BABA) and a $206 price target.
- China retail and e-commerce was on a gradual recovery in the September quarter off a highly disruptive June quarter. However, the recovery pace was moderate.
- Consumer sentiment remains soft attributable to the lack of confidence aggravated by COVID uncertainties and the reduction of use cases for consumer discretionary categories.
- With BABA’s significant exposure to discretionary categories, he anticipates BABA GMV trailing the industry growth in the quarter and has consequently lowered his 2Q23 revenue growth to 3.8% Y/Y vs. 6% Y/Y prior.
- On the positive side, his checks suggested BABA continues to execute its quality growth strategy with sustained effort on cost and investment optimization.
- As such, he expects potential upside to his prior bottom-line estimates and has raised his 2Q23 EBITDA estimate to RMB36 billion (+1 billion).
- Amidst macro uncertainties as a backdrop, he acknowledges growth uncertainties in the close quarters.
- He saw gains in downside protection despite short-term growth fluctuation with adequate cost savings.
- Price Action: BABA shares traded higher by 2.42% at $80.97 on the last check Friday.
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