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Investing.com-- Alibaba’s Hong Kong shares rose on Tuesday, a day after reports said the company planned to fold food delivery unit Eleme and travel agency Fliggy into its core e-commerce business.
Citi analysts said the move was positive for Alibaba (NYSE:BABA), and that it would help the company move beyond e-commerce and into a more comprehensive consumer platform.
Alibaba’s HK shares rose 2.1% to HK$113.10, helping spur a nearly 2% gain in the Hang Seng index.
Citi maintained its Buy rating on the stock with a price target of HK$165. The brokerage said that the potential restructuring will see Alibaba dedicate more resources to capital investment and support for its food and travel units, helping it broaden its scope beyond e-commerce.
This shift also comes amid heightened competition among China’s internet giants to grab a greater share of the consumer market. Alibaba rival JD.com (HK:9618) was also recently seen launching a travel service, joining an already crowded sector alongside majors such as Trip.com Group Ltd (HK:9961) and Meituan (HK:3690).
Citi analysts noted that Chinese retail trends had improved in recent months, especially amid increased support from government subsidy and spending programs. This saw Alibaba clock strong sales during the recent 6.18 shopping event.