Yahoo Finance Alibaba Group Holding Limited Just Recorded A 47% EPS Beat: Here's What Analysts Are Forecasting Next
It's been a sad week for Alibaba Group Holding Limited (NYSE:BABA), who've watched their investment drop 11% to US$89.00 in the week since the company reported its third-quarter result. Revenues were CN¥248b, approximately in line with whatthe analysts expected, although statutory earnings per share (EPS) crushed expectations, coming in at CN¥17.91, an impressive 47% ahead of estimates. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Check out our latest analysis for Alibaba Group Holding
Following the latest results, Alibaba Group Holding's 50 analysts are now forecasting revenues of CN¥976.1b in 2024. This would be a meaningful 13% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to surge 239% to CN¥42.94. Before this earnings report, the analysts had been forecasting revenues of CN¥981.8b and earnings per share (EPS) of CN¥43.01 in 2024. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.
The analysts reconfirmed their price target of US$145, showing that the business is executing well and in line with expectations. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic Alibaba Group Holding analyst has a price target of US$218 per share, while the most pessimistic values it at US$72.52. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Alibaba Group Holding is an easy business to forecast or the the analysts are all using similar assumptions.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that Alibaba Group Holding's revenue growth is expected to slow, with the forecast 10% annualised growth rate until the end of 2024 being well below the historical 25% p.a. growth over the last five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 11% annually. So it's pretty clear that, while Alibaba Group Holding's revenue growth is expected to slow, it's expected to grow roughly in line with the industry.
The Bottom Line
The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Happily, there were no real changes to sales forecasts, with the business still expected to grow in line with the overall industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
With that in mind, we wouldn't be too quick to come to a conclusion on Alibaba Group Holding. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Alibaba Group Holding going out to 2025, and you can see them free on our platform here..
However, before you get too enthused, we've discovered 2 warning signs for Alibaba Group Holding that you should be aware of.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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