Liberation Day gave way to Armageddon as markets sold off considerably Thursday. Large retaliatory tariffs against nearly every US trading partner caused the dramatic dump. At the center of this fight has always been China. During the 2nd Trump Administration, it feels like Canada and Mexico are the principle targets. Surprisingly, one Chinese company has really outperformed to start this year. With the selling, it has retraced to strong technical support at the 50-day and is looking to go higher.
That stock is today’s Bull of the Day, Alibaba (BABA). Alibaba Group Holding Limited, through its subsidiaries, provides technology infrastructure and marketing reach to help merchants, brands, retailers, and other businesses to engage with their users and customers in the People’s Republic of China and internationally. The company operates through seven segments: China Commerce, International Commerce, Local Consumer Services, Cainiao, Cloud, Digital Media and Entertainment, and Innovation Initiatives and Others.
The reason for the favorable Zacks Rank is that two analysts have increased their earnings estimates for the current year and next year. The bullish moves have pushed up our Zacks Consensus Estimate for the current year from $8.72 to $8.80 while next year’s number is up from $10.24 to $10.83.
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That puts current year earnings growth at just 2.09%, but that number does swell to 23% next year. That’s on revenue growth of 5.97% this year and 6.55% next year. The recent resurgence of Alibaba stock can be attributed to these bumps in earnings estimates. A quick look at the Price, Consensus and EPS Surprise Chart shows the big move in earnings. These started mid-2024. A couple of back-to-back earnings beats helped the stock regain its grip on $100. The most recent pullback has the stock down from $148 to the 50-day moving average near $129.
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This article originally published on Zacks Investment Research (zacks.com).