E-commerce site Alibaba Group Holding Ltd. is expected to benefit from improved spending trends in China.
According to the National Bureau of Statistics of China, e-commerce sales growth has grown to 41% year-over-year for the second quarter of the calendar year, up from 37% in the previous quarter. MKM Partners predict that this macro growth will add 400 basis points to Alibaba BABA, +0.04% gross merchandise volume.
While benefiting from increased spending on a macro level, Alibaba is also expected to get a boost from its growing cloud segment, which has a $1 billion revenue run rate and is a “significant driver” of growth for the company, even as it is one to two years away from an inflection point, according to Stifel Nicolaus analysts. Stifel analysts added the stock to their select list Tuesday and raised the price target to $180 from $165.
In its core business, Alibaba has been ramping up its personalization efforts, including better targeting using consumer data, as well as a bigger push on its mobile site. All of this is expected to contribute to a top-line beat for the quarter.
Source: Market Watch
