Late last week, on the back of the Chinese e-commerce giant’s strong fiscal first quarter results the Wall Street firm upped its price target from $180 a share, which means it thinks the stock could surge an additional 15%. Barclays isn’t the only bull when it comes to Alibaba. A slew of analysts raised their price targets last week with Raymond James becoming one of the most bullish with a price target of $230 a share. (See also: Alibaba Price Targets Raised Thanks to Cloud.)
Rising Price Targets
In a research report covered by Barron’s, Barclays analysts Gregory Zhao and Ross Sandler said the company “keeps defying the law of big numbers,” noting its earnings results surpassed Wall Street views with total revenue coming in 5% higher than Wall Street expectations. “Cutting-edge Personalization technology continues to improve user targeting and drive click volumes. Physical goods GMV [gross merchandise volume] growth accelerated to 49% y/y, demonstrating the platforms’ marketing capability and the effectiveness of new promotion initiatives on Tmall,” wrote the analysts, noting the its cloud business reached 1 million paying users in the three months ended in June, a milestone for the company.
What’s more, the analysts said Alibaba’s Hema supermarket strategy is already moving beyond the incubation stage. With Hema, the company is melding online data with physical stores, enabling visitors to peruse a slew of items that have barcodes attached to them. When scanned with a mobile device, users get information about the products and recommendations for other items that are similar. The barcodes work with its digital payment service AliPay, which can be used as the payment method at checkout. The stores also acts as hubs to pick up items that were purchased online. The Hema app lets users search and purchase items from the closest store, keep tabs on their purchase history, make recommendations and, thanks to its use of big data, enables customized product pages for its users. (See also: Alibaba Pushes Dual Strategy With New Stores.)
Barclays has been growing bullish on the stock for sometime, raising its price target multiple times in recent weeks. In August, it lifted the price target to $180 from $175. Five weeks prior to that it raised the target to $175 from $141 a share.
By Donna Fuscaldo