Among the famous Hong Kong stocks, Alibaba Group Holding Limited (HK:9988) (NYSE:BABA) continues to receive bullish ratings from analysts despite reporting an 86% year-over-year drop in its Fiscal Q4 earnings due to losses related to its equity investments. The company impressed analysts with its revenue growth, international market prospects, and commitment to shareholder returns.
Alibaba is a Chinese technology company widely known for its online marketplace and cloud computing business. Following the release of Fiscal Q4 results, Alibaba’s Hong Kong-listed shares declined initially but rebounded in the subsequent days. Over the last five days, Alibaba stock has surged by over 10% in trading.
Snapshot of Alibaba’s Fiscal Q4 Results
In Q4 FY24, Alibaba’s revenue increased by 7% to ¥221.87 billion in the fourth quarter, slightly surpassing consensus estimates. Among its segments, sales at its core domestic e-commerce division, the Taobao and Tmall Group, increased by 4%, while cloud computing revenue grew by 3%.
In terms of shareholder returns, the board approved a two-part dividend, including a cash dividend of $0.125 per ADS (American depositary shares) and a one-time extraordinary cash dividend of $0.0825 per ADS.
Bullish Sentiment Among Analysts
Post-results, analyst Tsz Wang from DBS reiterated a Buy rating on Alibaba stock, predicting an upside of 20.45%. Wang believes that the company’s international commerce business stands as the primary growth driver for the company. In the Fiscal fourth quarter, revenue from AIDC (Alibaba International Digital Commerce Group) surged 45% year-over-year, with the combined orders of AIDC’s marketplaces increasing by 20% year-over-year.
Wang anticipates a 23% CAGR for this segment from FY24 to FY27. DBS also has a bullish outlook on the company’s dominant position in China’s e-commerce market with Taobao and Tmall Group (TTG). Wang predicts that Taobao and Tmall revenue will increase by 5% annually until FY27.
Similarly, Joyce Ju from Bank of America Securities confirmed a Buy rating on Alibaba stock. Ju stated that double-digit year-over-year growth in TTG’s GMV (gross merchandise value) serves as a notable indication of its marketplace dominance.
Moreover, Ju believes that the company’s initiatives, such as significant share repurchases and dividend distributions, are aimed at benefiting shareholders and bolstering the stock’s attractiveness as an investment opportunity.
Throughout Fiscal 2024, Alibaba completed share repurchases totaling $12.5 billion. Earlier in 2024, Alibaba increased its share repurchase program by an additional $25 billion and extended it until the end of March 2027.
Is Alibaba a Good Stock to Buy?
On TipRanks, 9988 stock has received a Moderate Buy rating from analysts, based on four Buy and two Hold recommendations. The Alibaba share price target is HK$93.62, which implies a growth rate of 17.5% on the current trading price.
