Alibaba share price forecast ahead Q3 results

Alibaba Group Holding Ltd (NYSE: BABA) will announce third-quarter earnings results this Thursday, February 24, before the market opens.

Alibaba shares have weakened more than 50% in the period of the last twelve months, and the current price stands at $114.

Analysts have a positive view

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Alibaba will announce third-quarter earnings results this Thursday, and it is important to say that cloud computing profit margins have been rising and recently crossed the profitability threshold.

The Cloud computing segment has been one of the key drivers of revenue growth for Alibaba, growing from 4% to 10% of revenue in less than five years, and the rising trend should continue.

Alibaba should deliver a year-over-year increase in revenues while the consensus earnings per share estimate stand at $2.54 (-24% Y/Y). The stock might move higher if the third-quarter results top expectations, but management’s discussion of business conditions and future earnings expectations will also have an important influence on the stock price.

Alibaba continues to dominate the Chinese e-commerce market even though the company still faces investigation issues that put Alibaba’s collective businesses in the crosshairs of significant regulatory risk.

The positive news is that SoftBank reported this month that it would not sell shares of Alibaba, which established near-term support. SoftBank’s stake in BABA is close to 24%, and in the past, SoftBank has used its Alibaba shares as collateral for loans.

Many analysts, banks, and research companies have a positive view of the shares of Alibaba and reported that this company is stronger in relation to its competitors and also cheaper than its U.S. counterparts.

Barclays assigned a buy rating on shares with a $275 target price which implies more than 100% upside potential. Alicia Yap, the analyst at Citigroup, has a $216 price target on Alibaba, while analyst James Lee from Mizuho Securities assigned a $180 target price. Jiong Shao, an analyst from Barclays, added:

BABA stock trades at a massive discount, especially when compared to its FAANG peers. However, as with the FAANGs, Alibaba can’t afford to disappoint the market with weak earnings and guidance.

Bears in control of Alibaba

Alibaba shares weakened more than 50% since the beginning of the 2021 year, but if the company posts strong third-quarter earnings results, the share price could be above the current levels.

If the price jumps above $130, it will signal to trade Alibaba shares, and the next target could be $140.

On the other side, if the price falls below support at $100, it would be a strong “sell” signal, and we have the open way to $80.

Summary

Alibaba will announce third-quarter earnings results this Thursday, and if the company posts strong fourth-quarter earnings results, the share price could be above the current levels. Barclays assigned a buy rating on shares with a $275 target price which implies more than 100% upside potential.

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