By Investing.com — Jefferies analysts reiterated a Buy rating on Alibaba (NYSE:BABA) shares in a note this week, citing a clear roadmap and potential for unlocking growth across multiple segments.
According to the firm, Alibaba’s strategy, especially in Taobao Tmall Group (TTG) and Alibaba International Digital Commerce Group (AIDC), are well-positioned for improvement.
For the September 2024 quarter, Jefferies expects Alibaba’s revenue to grow by 6% year-over-year (YoY) to RMB 239 billion.
Taobao Tmall Group’s revenue is projected to increase by 1% YoY to RMB 98.7 billion, with customer management revenue (CMR) rising 3% YoY.
The analysts believe the gap between gross merchandise value (GMV) and CMR growth will narrow, driven by synergies with Weixin Payment, particularly among young users in lower-tier cities.
The report highlights Alibaba’s Cloud Intelligent Group is set for 7% YoY growth, “thanks to solid demand for artificial intelligence (AI)” services.
At the same time, AIDC is expected to continue improving efficiencies and maintaining revenue growth.
Despite these positive trends, Jefferies projects a 5% decline in EBITA to RMB 40.6 billion, mainly due to investments in Alibaba’s 88VIP program and losses in AIDC and other segments.
Jefferies stressed key focus areas for Alibaba, including consumer sentiment, growth momentum, and the upcoming Double-11 campaign, alongside AI and cloud growth trends.
“We reiterate our Buy rating and PT, factoring in the latest business trends,” said Jefferies, citing the company’s strong potential despite risks related to macroeconomic slowdown and regulatory challenges.
The firm expects long-term growth to be driven by Alibaba’s continued focus on improving its operational efficiencies and unlocking new market segments.
