MKM Partners, which has been named a “Top Research Performer” by Integrity Research, considers the China-based e-commerce giant Alibaba Holdings to have the best fundamentals of any of the mega-cap technology stocks on the Wall Street. The research firm has raised its 12-month price target on the U.S.-based e-commerce company.
MKM ranks Alibaba their top among Internet mega-caps
MKM Partners raised its return expectations for the e-commerce giant over the next year. It even declared that the China-based online retailing giant has the “best fundamentals of the mega-caps.” Rob Sanderson, the managing director of MKM Partners, wrote that they continue to rank the Chinese e-commerce giant their top pick among Internet mega-caps and think the company has the best fundamentals of the group.
He added, “We think [raising estimates] is warranted because of +50% organic growth in the segment, strong secular trends, dominant market position and +60% margin.” Sanderson listed many reasons why the research company is considering the fundamentals of Alibaba the best on the Wall Street, which is ahead of other technology giants such as Facebook and Amazon. The list of Sanderson cited the potential for ad expansion, traffic growth, the acceleration and adoption of e-commerce in Southeast Asia as critical growth drivers.
The analyst increased his 12-month price target from $177 to $220, representing a rise of 26% from a close on Tuesday. According to FactSet, this new target embeds a 30 times multiple for the core commerce business. In addition to this, FactSet reports that the new target is tied for the highest projection by any analyst.
Alibaba reports great earnings, soars nearly 10%
Alibaba that is the favorite tech stock of hedge fund heavy hitters reported better-than-expected earnings recently. Its shares have hiked almost 10% since the China-based e-commerce company released earnings last week. The price have nearly doubled for this year. Sanderson said, “We think the stock will extend its gains on a very strong result. Consumption growth in China and migration to online is a very long duration growth story and BABA’s competitive position is extremely strong in our opinion.”
Joseph Tsai, the Executive Vice Chairman of Alibaba talked about the future of the “New Retail” initiative of Alibaba on Thursday on Alibaba’s conference call after the release of earnings. He said, “The reason we were able to deliver these results is that we sowed the seeds years ago by investing in technology, by investing in innovation, by investing in people and by being bold with a vision that nobody thought was possible.” He added, “Time, place and method of purchase and consumption will be different from what we’re used to before. In this new world of consumption expectations, the distinction between online and offline would disappear.”