
© Reuters. Morgan Stanley expects Alibaba (BABA) to report ‘one other painful transitional quarter’
Morgan Stanley reduce its value goal for Alibaba (NYSE:) shares to $85 from $80 in a notice Monday, sustaining an Equal-Weight ranking on the inventory. The financial institution stated it sees the corporate reporting “another painful transitional quarter.”
Previewing the Chinese e-commerce large’s 3QF24, analysts forecast whole income of RMB260bn, up 5% YoY and 16% QoQ. They see non-GAAP EBITA coming in at RMB52.1bn, flattish YoY, and up 22% QoQ with non-GAAP EBITA margin at 20% for fiscal 3Q.
“We think the group’s focus on price competitiveness and everyday low-price strategy will have made an initial positive impact on GMV for the quarter, leading to a narrowing growth gap vs. the industry. We forecast low-single-digit GMV growth for fiscal 3Q vs. 6.4% yoy growth in industry online retail sales of goods for October-November 2023, according to NBS,” analysts stated.
“However, on monetization, we expect Customer Management Revenue (CMR) to grow more slowly than GMV for the quarter, at 0-1%. 1) Increased engagement of Taobao merchants (owing to low price strategy) is likely to increase Taobao GMV in the mix vs. Tmall, constraining take rate. 2) Commission revenues continued to decline. Overall, we forecast Taobao Tmall Group revenue and adjusted EBITA to grow 1.4% yoy and 0-1% in F3Q,” they added.
Morgan Stanley believes the BABA enterprise transformation is more likely to take time, though they really feel that extra sturdy capital administration could possibly be an upside catalyst.