Alibaba Group (BABA) is scheduled to report results of its fiscal fourth quarter of FY23 before the U.S. market opens on Thursday, May 18, and will hold a conference call to discuss the results at 7:30 a.m. U.S. Eastern Time the same day. What to watch for: 

ANALYSTS, ACTIVIST WARM UP TO ALIBABA: In late March, Alibaba Group said it will reorganize into six business groups and other investments in "a move designed to unlock shareholder value and foster market competitiveness."

After Alibaba said it will split into six units, Morgan Stanley called the restructuring a "significant positive catalyst" and told investors that the firm sees the potential to unlock "significant" sum-of-the-parts value given its belief that the market assigns zero value to the ex-core e-commerce businesses. The firm, which said its sum-of-the-parts-based bull value of $200 per share "implies 100%-plus upside," has an Overweight rating on Alibaba shares.

The next day, JPMorgan said it expected a positive share price reaction to Alibaba's reorganization announcement. The firm's sum-of-the-parts valuation analysis indicates a $210 value per share as a "blue sky scenario," the analyst told investors in a research note at that time. JPMorgan expects the reorganization to make the entire company more cost-efficient as individual business units become accountable for their own performance. The reorganization will lead to consistent margin improvement in the future, added the analyst, who kept an Overweight rating on Alibaba shares.

Earlier this week, Third Point disclosed in an SEC filing its holdings as of March 31. The fund's 14 new buys during the first quarter included, by size of position, Alphabet Class A (GOOGL), HCA Healthcare (HCA), Salesforce (CRM), Alibaba, and National Instruments (NATI), the filing with the SEC showed.

SEC COMPLETES REVIEW OF FY22 REPORT: On May 11, the United States Securities and Exchange Commission released on its website the full set of correspondence between the SEC's Division of Corporation Finance and Alibaba from September 7, 2022 through April 12, 2023 in relation to the SEC's regular review of the company's annual report for the fiscal year ended March 31, 2022 filed on July 26, 2022, the company announced earlier this week. The SEC confirmed in its letter dated April 12 that it has completed its review, Alibaba said in a statement. Unless released by the SEC, correspondence between the SEC and a U.S. reporting company is not available for public review, it added.

RECENT ANALYST COMMENTARY: On May 9, Mizuho lowered the firm's price target on Alibaba to $145 from $155 and kept a Buy rating on the shares. An economic recovery is underway in China, with retail sales improving, but the services industry is outperforming due to a mix shift into travel, the analyst stated. However, overall consumer sentiment remains cautious due to the high unemployment rate and an unstable real estate market, added the firm. Going forward, it expects policy support to address these issues, but reduced price China internet targets due to estimate adjustments and industry multiple compression.

The next day, Loop Capital lowered the firm's price target on Alibaba to $130 from $135, but kept a Buy rating on the shares ahead of the company's quarterly report. While the consumption environment in China is improving slowly, it remains soft, especially for durable goods, the analyst told investors. Loop likes Alibaba's position with greater exposure to the rebound in discretionary spending.

CONSENSUS: In terms of overall results for the March-end quarter, analysts are calling for Alibaba to report total revenue of $30.24B. The consensus Q4 earnings forecast stands at $1.35 per share. For the June-end quarter, analysts' consensus currently calls for revenue of $32.34B and for Alibaba to post a profit of $2.06 per share, according to data from Refinitiv.

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