Alibaba Group (BABA) shares have been high flying for more than a year now, but that hasn’t stop Raymond James from predicting that the stock still has room to march higher.

In a research report, Raymond James analyst Aaron Kessler said the stock’s current valuation doesn’t take into account strong commerce earnings. Kessler said in the note, which was covered by Barron’s, that the stock is trading at around 28 times core commerce earnings, which is lower than the commerce growth rate of 40% expected in 2018. (See also: Alibaba Invests in Chinese Electric Carmaker.)

The analyst pointed to Amazon.com Inc. (AMZN) as an example of how the Chinese e-commerce giant is undervalued. According to Kessler, Alibaba and Amazon operate similar types of business with the main focus on retail. They both have cloud computing units that are growing and digital media and entertainment offerings. Despite that, Alibaba doesn’t garner the same multiple as Amazon. Amazon stock currently trades around 300 times expectations for 2018 earnings, noted Barron's. "We believe Alibaba continues to benefit from improved real-time personalization, which is driving improved click through rates and conversion and driving improved take rates," Kessler wrote in the report.

Blowing Past Wall Street Views

Kessler has a strong buy rating on Alibaba and a $220 price target. That implies shares can gain up to an additional 8%. Recently, the stock was under pressure in pre-market action after reporting fiscal third-quarter results that beat on the revenue side but missed on the EPS. For the three months ended in December, the e-commerce giant posted revenue of $12.8 billion, up 56% from a year ago and adjusted EPS of $1.63 a share. Analysts were looking for revenue of $12.8 billion and earnings of $1.67. In conjunction with its earnings report, Alibaba said it was acquiring a 33% stake in Ant Financial, its digital payment arm, for an undisclosed sum.  

For its fiscal second quarter, which Alibaba reported in November, it blew past Wall Street views, with earnings close to 26% higher than Wall Street expectations and revenue up 6% over the estimate. “We had an excellent quarter, with revenue growth of 56% year-over-year. Given our strong performance and clear visibility as we approach the end of the fiscal year, we are taking up our 2018 fiscal year revenue guidance to 55% to 56%, which is an increase over the top end of the range of 53% that we communicated last quarter,” said Alibaba Chief Financial Officer Maggie Wu in a press release. “Our core business generated significant free cash flow of US$7.1 billion during the quarter, enabling us to invest in New Retail, cloud computing, digital entertainment and globalization.” (See also: Alibaba Launches Cryptocurrency Mining Platform.)

Raymond James isn’t the only one that is bullish on Alibaba’s prospects heading into its earnings report. Based on recent action in the options market, traders are betting shares could be around $237 in the middle of April. Alibaba’s ability to beat Wall Street views by a sizable amount in the past could be driving the bullish options trades.