Broker Wedbush repeats a 'neutral' stance on online retail and e-commerce giant Alibaba (NASDAQ:BABA) after the second quarter results on Thursday.
The broker concedes the numbers were good but added: "We see Alibaba as a fast-growing global ecommerce market leader, but believe a slowing Chinese economy will cap share appreciation.
"However, June quarter results do not show signs of deceleration yet."
The broker lifted its tareget to US$90 from US$80 per share.
Sales in the three months advanced to RMB32.15bn, equivalent to about US$4.8bn, versus market expectations of RMB30.2bn.
Profit after tax also topped The Street’s best guess, coming in at RMB7.1bn, down from RMB30.8bn the year before, when the company booked gains on investments and businesses.
Wedbush said a break-down of the numbers showed that more than all of its profits were coming from the core commerce segment with the profitability of the Cloud Computing segment improving rapidly.
Analyst Gil Luria said that the firm expects the company to continue investing in its Digital Media and Entertainment segment and Innovative Initiatives, thus limiting future margin expansion.
The broker reckons data on overall China growth indicates the economy is barely growing and consumer spending in China is decelerating as well.
"While Alibaba may transcend these trends for a while, we believe it will not be able to escape a possible further downturn," it said.
Elsewhere in brokerland, heavyweight, Goldman Sachs takes a look at Quest Diagnostics (LON:DGX) and moves shares to 'neutral' from 'buy', while Morgan Stanley on the flip side, gives a thumbs up to Alaska Air Group (LON:ALK) and moves the shares to 'overweight' from ' equalweight'.
American Airlines (LON:AAL) receives an 'equalweight' rating - moved down from 'overweight'.