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2020-08-19 14:46

Alibaba Group Holding Limited (NYSE: BABA) is scheduled to publish its quarterly financial results on Thursday. Investors and analysts alike are interested in the e-commerce giant’s first-quarter earnings report on August 20th, as it will offer an insight into the state of consumer spending in China; where the Coronavirus pandemic first originated halted economic activity for months.

Earlier this year in June, Alibaba made a joint statement with its peer, JD.com, that highlighted the two companies to have made a record $145 billion of sales in China’s annual shopping festival, 618.

Alibaba’s financial performance in the fiscal fourth quarter
In the fiscal fourth quarter, Alibaba’s performance was reported downbeat as its net income shrunk to $485 million. The Chinese company had attributed its decline to COVID-19 that has so far infected more than 22 million people worldwide and caused over 0.75 million deaths. The virus outbreak, as per Alibaba, had disrupted business worldwide that resulted in a devaluation of its equity investments in a range of public companies.

But its financial results in the previous quarter still printed stronger than what the analysts had anticipated. Alibaba generated $17.38 billion of revenue and $1.40 of earnings per share in the fiscal first quarter as compared to $16.35 billion of revenue and 92.47 pence of earnings per share expected.

Alibaba’s earnings surprise in Q1 stood at 47.7% that was in line with its impressive historical record. The technology company has topped experts’ forecasts in the past four quarters in a row with 25.95% of average surprise. For the fiscal first quarter, the Chinese multinational is now expected to note $21.4 billion of revenue. In terms of earnings per share (EPS),experts’ forecast is currently capped at $2 per share for Alibaba in Q1. The estimates revenue translates to a 29% increase on an annualized basis.

Alibaba’s average price target marks about 11.8% upside potential
62 brokers out of a total of 63 currently have a ‘buy’ rating on Alibaba. The average price target for the next 12 months stands presently at $287.14 per share that marks an about 11.8% upside versus $259.92 per share at which Alibaba closed the regular session in the stock market on Tuesday.

According to Pan Jingyi of IG Asia:

“Some bearish divergence had been noted on the MACD (moving average convergence-divergence),but prices remain positioned for a breakout, one to watch. A dip past the uptrend support may, however, suggest that prices will continue consolidating in the near-term.”

Shares of the company opened more than 0.5% up on Wednesday but lost the entire gain in the next hour. At $260 per share, Alibaba is currently a little under 20% up year to date in the stock market. In March due to the Coronavirus disruptions, the stock had tumbled to as low as $176 per share.

Alibaba’s performance in the stock market was largely upbeat in 2019 with an annual gain of more than 50%. At the time of writing, the Hangzhou-based company has a market cap of £610 billion and a price to earnings ratio of 32.10.