Deutsche, Bernstein bullish on Alibaba following Singles Day

Two research firms were upbeat on Chinese e-commerce giant Alibaba (BABA) after the company reported results from China's "Singles Day" holiday yesterday. Deutsche Bank hiked its price target on the stock to $98 from $89, while Bernstein wrote that the company's gross merchandise volume could accelerate this quarter. BACKGROUND: Alibaba reported that it generated $14.3B of gross merchandise volume on Singles Day, a 60% increase from 2014's event. ANALYST REACTION: The 60% year-over-year increase in Alibaba's Singles Day volume exceeded Deutsche Bank's outlook for a 40% increase, analyst Alan Hellawell III stated. Alibaba is benefiting from improved logistics and its monetization rate "should trend up nicely going forward," Hellawell believes. The analyst raised his estimates for the company and kept a Buy rating on the shares. It's difficult to predict Alibaba's Q3 gross merchandise volume, or GMV, based on its Singles Day sales, wrote Bernstein analyst Carlos Kirjner. However, using "reasonably conservative assumptions," it appears that Alibaba's GMV growth will accelerate in Q3. Specifically, Kirjner estimated that even if Singles Day accounts for a significantly higher percentage of the company's Q3 GMV than in 2014, its year-over-year Q3 GMV growth could reach 36%-47% this quarter, up from 28% last quarter. The analyst also believes that his previous GMV growth estimates for the company for the next two years may have been too low. He now predicts that Alibaba's GMV will increase in the high 20s-low 30s percentage range in fiscal 2016 and in the mid to high 20s in fiscal 2017. Kirjner kept a $110 price target and Outperform rating on the shares. WHAT'S NOTABLE: JD.com (JD), an online direct sales company operating in China, also announced "record-breaking" one-day results from its November 11 Singles Day sale. The 24-hour sale saw the number of orders grow by 130% and an increase in GMV of more than 140% compared to last year, the company said. PRICE ACTION: In late morning trading, Alibaba was flat at $79.82, while JD.com rose more than 4% to trade above $29 per share.