Goldman Sachs released a report on Alibaba (BABA, Financial), highlighting that despite weak quarterly results, the overall performance was in line with expectations. The slight negative reaction in the stock price was primarily due to Taobao and Tmall's GMV growth falling short of expectations and the increased quarter-on-quarter decline in their EBITA compared to the group EBITA.
However, Alibaba's management remains optimistic about the third fiscal quarter, prompting Goldman Sachs to revise its CMR growth forecast for the third and fourth fiscal quarters to 5.4% and 6.2%, respectively, up from previous predictions of 4.6% and 5.7%. The investment firm maintains its "Buy" rating for Alibaba with a target price of $131.
Goldman Sachs noted further improvement in Alibaba Cloud's growth, adjusting the EBITA profit margin forecasts for the third and fourth fiscal quarters to 9.5% and 9.3%, respectively. For Taobao and Tmall, EBITA predictions for the third and fourth fiscal quarters were revised to a 3% decline and a 1% increase, from previous estimates of a 2% decrease and a 0% increase.
Additionally, Goldman Sachs reduced its revenue forecast for Alibaba's fiscal years 2025 to 2027 by 1%, also lowering the adjusted net profit forecast by 1% to 2%.
