Shareholders of Alibaba Group Holding Limited ( NYSE:BABA ) will be pleased this week, given that the stock price is up 15% to US$144 following its latest third-quarter results. It looks like a credible result overall - although revenues of CN¥280b were what the analysts expected, Alibaba Group Holding surprised by delivering a (statutory) profit of CN¥20.39 per share, an impressive 28% above what was forecast. 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
See our latest analysis for Alibaba Group Holding
Taking into account the latest results, the consensus forecast from Alibaba Group Holding's 50 analysts is for revenues of CN¥1.08t in 2026. This reflects a meaningful 9.6% improvement in revenue compared to the last 12 months. Per-share earnings are expected to step up 11% to CN¥59.24. In the lead-up to this report, the analysts had been modelling revenues of CN¥1.08t and earnings per share (EPS) of CN¥55.66 in 2026. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.
The analysts have been lifting their price targets on the back of the earnings upgrade, with the consensus price target rising 22% to US$148. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values Alibaba Group Holding at US$191 per share, while the most bearish prices it at US$86.01. 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.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's pretty clear that there is an expectation that Alibaba Group Holding's revenue growth will slow down substantially, with revenues to the end of 2026 expected to display 7.6% growth on an annualised basis. This is compared to a historical growth rate of 12% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 9.4% per year. Factoring in the forecast slowdown in growth, it seems obvious that Alibaba Group Holding is also expected to grow slower than other industry participants.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Alibaba Group Holding's earnings potential next year. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.
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 2027, and you can see them free on our platform here. .
We also provide an overview of the Alibaba Group Holding Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here .
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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.