Alibaba Group (BABA) Will Not Disappoint, Says Santosh Rao

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People should expect Alibaba Group Holding Ltd (NYSE:BABA) to post a “solid” July-September quarter, Santosh Rao said in a discussion on CNBC.

Alibaba, Santosh Rao, third quarter, 3Q2014, is BABA a good stock to buy, The comment from the Head of Research at Manhattan Venture Partners comes as the Chinese electronic commerce giant will shortly reveal its first quarterly performance report since it debuted on the New York Stock Exchange (NYSE).

“We’re expecting a solid beat this quarter. It’s coming in with good momentum. It’s an e-commerce juggernaut, as you know. […] All the basic fundamentals are solid. The consumption is strong. All the basic demand factors are strong,” Rao said.

According to the analyst, Alibaba Group Holding Ltd (NYSE:BABA) is expected to post good numbers for its first ever quarter as a publicly-traded company at the (NYSE).

For example, revenue growth for the company is expected to be “solid,” according to Rao. Furthermore, he was also optimistic about Alibaba Group Holding Ltd (NYSE:BABA)’s margins saying that this will stay steady at above 40%. Expect the fundamentals to be good, he added.

The key metric to look at in the Alibaba Group Holding Ltd (NYSE:BABA) report is its mobile monetization. Rao said that the company should be able to increase its mobile monetization and close the gap from its desktop business monetization.

Rao said that though EBITDA margin is at 54.4% and operating margin is at 43.4% and that these margins are expected to decrease a little, the company should maintain these metrics at the high 40% range. Other than this concern, he said that the online marketplaces, which is Alibaba Group Holding Ltd (NYSE:BABA)’s core business, and its market share are holding up.

He said that investors should be happy with EBITDA margin in the high 40% range and top line growth in the low 50% range.

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