11:57 AM EDT, 10/10/2024 (MT Newswires) -- Alibaba ( BABA ) merits a "conservative view" as the company's reinvestments and a weak consumption scenario are still weighing on its earnings, Morgan Stanley said in a report emailed Thursday with a preview of the company's fiscal Q2 results.

Morgan Stanley sees the company's fiscal Q2 revenue at 237 billion yuan ($32.47 billion), 1% below consensus estimates.

Adjusted EBITA is seen at 40 billion yuan, 1.5% below consensus estimates due to a "5% decline in [Taobao/Tmall Group] EBITA as we expect increased reinvestments in [Taobao/Tmall Group] to drive user adoption," the investment firm said.

"More importantly, we believe these reinvestments could continue to weigh on earnings in coming quarters, especially given upcoming Double-11 promotions after the recent policy pivot to boost consumption," the note said.

Morgan Stanley kept its equal-weight rating on Alibaba ( BABA ) and raised the price target to $115 from $90.

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