Alibaba earnings turnaround hopes revived after shares rise 60%

Alibaba earnings turnaround hopes revived after shares rise 60%

After the e-commerce giant surged from a mid-March low, some of the largest brokerages on Wall Street have reiterated their bullish calls for Alibaba Group, indicating that additional gains may be in store.

The retailer’s profits per share consensus forecast for the upcoming 12 months has improved, according to data gathered by Bloomberg, from a low that was three years old at the end of May by more than 7%. More than 10 brokerages have increased their buy calls during the previous week, including Citigroup and Goldman Sachs Group.

Bets on Alibaba are buoyed by rumors that a crackdown on the tech industry may be coming to an end. Alibaba’s shares in Hong Kong have risen by more than 60% since their record low in the middle of March. During that time, the Hang Seng Tech Index has gained nearly 38%.

In a note on Sunday, July 3,

Goldman analysts including Ronald Keung wrote, “We expect Alibaba’s market share loss to gradually stabilise and remain constructive on the company’s ability to expand its total addressable market.”

Goldman says that in a meeting on Thursday, Alibaba told analysts and retailers about its business plans. In a note, Jefferies Financial Group stated that the company addressed some “pain points” for its merchants and emphasized its efforts to support Shanghai consumers during Covid lockdowns.

Due to cost-control measures and an increase in new business initiatives, the company’s revenue for the March quarter was higher than analysts anticipated. In addition to the negative effects of slower demand brought on by the pandemic, the retailer has had to contend with intense competition from rivals and Pinduoduo.

Despite this, investors remain wary of the Chinese economy as a whole because of the country’s strict Covid-zero policy and the rising infections in Shanghai that led to mass testing.