By Senad Karaahmetovic
Benchmark analysts reiterated a Buy rating on Alibaba (NYSE:BABA) stock as they believe the fundamental recovery is largely on track.
Alibaba shares have rallied recently after the company said it plans to split into 6 new business units, a move that is likely to “unlock value,” they wrote to clients in a note.
“This could help to boost BABA’s fundamental competitiveness longer term, in our view.”
Channel checks on Alibaba were positive, analysts add, as the core marketplace recovery in F4Q23 was largely on track.
“Direct sales may see some softness due to the normalcy of offline grocery shopping, which we regard as a short-term headwind,” the analysts added.
“We have moderately lowered our F4Q23 revenue to RMB 208.6B (+2.2% y/y) vs. RMB 211.6B (+3.7% y/y) factoring 1P headwinds. On the bottom line, we raised our adjusted EBITDA projection to RMB 29.2B (+14% margin) from RMB 28.3B prior due to outperformance on CMR.”
All in all, the analysts continue to see a positive risk-reward in Alibaba stock despite the recent rally.
Their price target of $180 per share implies an upside potential of ~83%. Shares are up 11.7% YTD.