The growth in Alibaba’s (NYSE:BABA) cloud computing unit is likely to accelerate it recently reported stronger-than-expected performance, investment firm Barclays said.
Shares rose 3% in late morning trading.
“We expect cloud revenue growth to continue to accelerate from 26% year-over-year in [the] June-quarter in coming quarters with stable margins,” Barclays analyst Jiong Shao wrote in a note to clients. “With respect to the price war in food delivery and BABA’s significant losses in instant commerce, our conviction has been that the significant losses are transitory and losses will likely peak in Sep.-Q. We expect BABA to run its instant commerce business at around break-even in a steady state, while extracting meaningful synergy to benefit its core ecommerce franchise.”
Shao reiterated the firm’s Overweight rating and upped the firm’s price target to $190 from $145.
