Bank of America: Raises Alibaba's target price to HKD 114 and adjusts the earnings forecast for the fiscal year 2025 to 2027

Bank of America Securities released a report indicating that Alibaba is expected to announce its third-quarter results for the fiscal year 2025 between mid to late February, estimating a year-on-year revenue growth of 9% to CNY 283.5 billion, which is 2% higher than market expectations, with core Taotian Group revenue expected to rise by 7% year-on-year. Additionally, the bank anticipates that customer management revenue in the Chinese market will grow by 7% year-on-year to CNY 98.8 billion, primarily benefiting from the acceleration of Alibaba's gross merchandise volume growth during the Double Eleven promotion, appliance subsidy programs, and ongoing user engagement and experience upgrades; the increase in commission rates on Taobao and the artificial intelligence tool Quanzhantui have also improved the group's monetization rate. The bank believes that Taotian Group's growth rate will outperform the industry, with adjusted EBITA forecasted to grow by 1% year-on-year to CNY 60.7 billion; revenue from Alibaba's International Digital Commerce Group and cloud business is expected to grow by 26% and 9% year-on-year, respectively. The bank expects Alibaba's overall adjusted EBITA to be CNY 54.4 billion, a year-on-year increase of 3%; adjusted net profit is forecasted to be CNY 47.4 billion, slightly above market expectations. Looking ahead to the fiscal year 2026, as strategic investments in the core e-commerce business begin to yield results, it is estimated that the adjusted EBITA of Taotian Group and the group will resume growth. The bank has raised its adjusted net profit forecasts for Alibaba for the fiscal years 2025 to 2027 by 4% to 7%, increasing its target price from HKD 109 to HKD 114, maintaining a "Buy" rating