China’s economic slowdown will be measured by Alibaba report

Amid investor uncertainty about the state of China’s economy and the effect of trade tensions, Alibaba Group Holding Ltd. will provide its take about consumer spending in the country Wednesday. The Chinese e-commerce giant is due to report fiscal third-quarter results before the market opens Wednesday. The company’s holiday-period results will show whether it suffered as well from a general deceleration in e-commerce spending, which the Chinese government reported for the December quarter.

Baird analyst Colin Sebastian said that Alibaba BABA, +0.24%  might be more immune than others to some of the macroeconomic issues impacting spending levels in the country, as big-ticket items like electronics and appliances have been among the categories most affected by China’s slowdown. Still, he recently trimmed his estimates for Alibaba’s March-ending fiscal year “to reflect a less supportive China macro backdrop.”

Sebastian noted that growth picked up a bit in the month of December, so investors should pay close attention to management’s commentary about spending backdrops for signs of a rebound. He rates the stock at outperform with a $178 target price.

Analysts surveyed by FactSet project that Alibaba recorded $1.69 in adjusted earnings per share for the December quarter, up from $1.63 a year earlier. According to Estimize, which crowdsources estimates from hedge funds, academics and others, the average projection is for $1.67 a share in earnings. Analysts tracked by FactSet call for $17.6 billion in fiscal third-quarter revenue, up from $12.8 billion a year ago.

Alibaba earnings: China slowdown’s effect on e-commerce spending is key factor, MarketWatch, Jan 29