On Thursday, Loop Capital revised its forecasts for… Ali Baba (NYSE:) Group Holding Limited (NYSE:BABA) shares, increasing their price target for the company to $115 from $111, while reaffirming a Buy rating on the stock.
The company's analyst highlighted Alibaba's potential for a positive valuation turnaround, after a long period where the stock was seen as a valuation trap for investors interested in China's internet sector.
The analyst pointed to several factors that could lead to a revaluation of Alibaba shares, including the company's compelling valuation of 5.2 times forward earnings per share (EPS) at the group level.
In addition, Alibaba's proactive approach to share buybacks has been acknowledged, although it has been noted that the stock lacks a clear catalyst for growth.
The outlook for the second half of fiscal 2025 is set as a turning point for Alibaba. The analyst expects stabilizing market share, improving monetization, and re-accelerating cloud revenue growth to serve as catalysts for the stock's revaluation. In light of these expectations, Loop Capital revised its estimates and raised its target price.
The update from Loop Capital comes at a time when investors have been cautious about the prospects of Chinese internet companies, due to regulatory challenges and market conditions. Alibaba, in particular, has faced scrutiny, but now appears poised for a potential turnaround as market dynamics evolve.
In other recent news, Alibaba has made great strides in various aspects of its business. The company launched Alibaba Assured, a service aimed at simplifying global sourcing and supply chain operations for SMEs.
This new feature offers fixed prices with shipping fees included, dispatches goods within 72 hours, and guarantees on-time delivery, among other benefits.
In terms of financial developments, Alibaba succeeded in raising $5 billion through a private placement of convertible securities. The move included the sale of 0.50% convertible senior notes due 2031, attracting institutional buyers both in the US and abroad.
On the earnings front, Alibaba reported strong growth in its core businesses and AI revenues during the March quarter and full fiscal year 2024. Notably, there were significant increases in gross merchandise volume and revenues in key segments such as Taobao and Tmall.
Analysts at BofA Securities responded to these developments by increasing their price target on Alibaba stock to $103 from $99, while maintaining a buy rating. However, Mizuho revised its price target on Alibaba stock to US$92.00 from US$95.00, while maintaining its buy rating.
These adjustments were based on Alibaba's latest quarterly report and the company's ongoing stock buyback program, which is worth approximately $30 billion.
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