Credit Suisse Raises Alibaba's Price Target

Credit Suisse maintained its Outperform rating on Alibaba Group Holding Ltd (NYSE: BABA) Wednesday and raised its price target from $114 to $118.

The revision comes after the company beat earnings expectations on Tuesday.

Analyst Dick Wei noted that he liked that “(1) China GMV reaccelerated, driven by early signs of reacceleration in customer acquisitions; (2) strong improvement was seen in the number of active buyers; (3) mobile GMV was strong; (4) mobile take rate rose to 1.87 percent; (5) GPM (73.6 percent) and OPM (43.7 percent) were better than our earlier forecasts.”

Wei was concerned with “(1) Lower-than-expected overall take rate; (2) dropping PC take rate; (3) slight QoQ decline in the overall online marketing revenue; and (4) high SBC expenses.”

The analyst note concluded that the firm has turned “more positive on the monetisation potential of the Alibaba ecosystem going forward, particularly from mobile and international opportunities.”

The DCF-based valuation of US$118 per share implied a 44.7x CY 2015E and 34.1x CY 2016E diluted adjusted EPS.

Alibaba traded at $107.40 in the premarket, up 1.25 percent.