Alibaba Group Holding Limited (NYSE: BABA) has confirmed the earnings release date for its fiscal Q3 report, which is on Thursday, February 24, 2022, before the market open.
What to look for: The upcoming Q3 2022 earnings report will be the first quarterly release since the regulatory crackdown commenced in China. The report will be important to investors who will be keen to see whether the company can sustain its high historical growth amid tougher regulations and macro environment in China. When the company released its Q2 2022 results, it indicated that full-year revenue is expected to grow by 20-24%. Q3 revenue growth will likely be lower than in the previous two quarters, but earnings are expected to be better than projections.
Earnings: Stockearning’s Estimated EPS for Q3 2022 is expected to be $2.54 compared to earnings of $2.98 per share a year ago. In the second quarter, the company missed estimates by $11.64%, with earnings of $1.29. Historical EPS Performance shows that the company has in the past 12 quarters topped estimates 17 times (58%) and missed estimates 12 times (41%).
Revenue: The company is expected to post revenue of $38.68 billion in Q3 2022 compared to $33.66 billion a year ago. For FY 2022, the company's earnings are likely to drop 17.6% YoY to $8.26 per share, and full-year revenue could increase 21.9% YoY to $134.98 billion. The company’s massive scale and eCommerce system create multiple revenue streams that insulate the company from an economic downturn.
Stock movement: BABA shares have lost 26.4% since the company released its fiscal Q2 2022 earnings. Interestingly, the company’s shares have been DOWN 17 times out of the past 29 quarters. So, the historical price reaction suggests a 58% probability of the share price going DOWN following the fiscal Q2 2022 earnings release. According to the Stockearning algorithm, the predicted volatility on the first day is +/-3%, while the predicted volatility on the seventh day is +/-6%.
What analysts are saying: Mizuho Securities analyst James Lee lowered his price objective for Alibaba last week, citing a "challenging business quarter." Lee kept his buy recommendation on the stock but reduced his price objective from $215 to $180. The present levels of about $123 represent a potential upside of more than 46%. Alibaba has suffered from corporate governance concerns and a shaky political position in China, both of which have hindered its expansion.
Truist analyst Youssef Squali slashed his price target on BABA from $200 to $180 but maintained a Buy rating on the stock as part of a wider research notion Internet and Digital Media. Following the release of the Chinese Stats Bureau's digital-physical goods sales statistics, which showed a +5% Y/Y increase in the December quarter, he has lowered his Q3 revenue predictions to RMB 239 billion, vs a consensus of RMB 249 billion, according to the analyst. Squali, on the other hand, is "impressed" by Alibaba's "huge possibilities" in China and Southeast Asia in the long run.
Stifel’s Scott Devitt slashed his price target on the stock from$170 to $150 but maintained a Buy rating on the shares ahead of the fiscal Q3 2022 results. According to National Bureau of Statistics data, Devitt cut his current-quarter revenue growth projection to 12.1 percent from 15.5 percent year-over-year to reflect weaker than previously predicted revenue due to slower growth in discretionary categories. He also lowered his revenue growth forecast for FY22 from 21.7 percent to 19.8 percent, citing overall weakness and uncertainties in the Chinese macroeconomic situation.
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