China’s high-profile economic struggles shouldn’t take too much shine off Alibaba’s stock, according to analysts.
Chinese e-commerce giant Alibaba is set to report its earnings for the June quarter on Thursday.
The e-commerce giant is set to report its earnings for the three months ended June 30 on Thursday. It’s expected to post a profit of 2.03 Hong Kong dollars (26 cents) a share on sales of just under HK$268 billion, per FactSet consensus estimates.
Alibaba does face threats. Sluggish economic growth and low inflation have weighed on Chinese consumer spending this year, while a seemingly never-ending property-market crisis has eroded household wealth. Upstart rival PDD, which owns Pinduoduo in China and Temu in the U.S., has also chipped away at the company’s market share in recent years.
But Wall Street still likes the stock. All but eight of the 59 analysts who cover Alibaba have given it a Buy rating, according to FactSet, with a consensus price target of $103.83 implying that shares can jump by nearly a third from their current levels.
Mizuho Securities analyst James Lee, who sees the stock as a Buy and has set a $92 price target, said in a research note published earlier this month that Alibaba makes sense as a “defensive play” if China’s economy continues to falter.
Investors are also yet to price in how food delivery, online video, and payments—all of which fall outside the Alibaba’s core e-commerce and cloud businesses—can boost the company’s bottom line, he added.
As of Wednesday, Alibaba’s Hong Kong-listed shares were up 3.6% for the year, compared with a 0.4% rise for the benchmark Hang Seng stock market index. Its American depositary receipts have climbed 2.5% over the same period.