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<Research>UBS Lifts Alibaba (BABA.US) TP to US$140; Bottoming Out Fundamentals w/ Re-rating Catalysts
Recommend 34 Positive 48 Negative 8 |
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BABA-W (09988.HK)(BABA.US)’s stock price has gradually touched a tipping point, mainly due to the easing traditional marketplace share loss to live-streaming platforms, which is boon to Alibaba's gross merchandise value (GMV); new advertising products and service fee discounts, which may gradually take effect, thereby increasing customer management revenue (CMR); and the meaningful loss reduction of non-Taobao Tmall Group business, which helps reverse the downward earnings revision cycle. Alibaba's fundamentals bottomed out with the catalyst for a re-rating, the broker opined, expecting Alibaba's potential EBITA recovery to be the catalyst for a re-rating of Alibaba's stock, paired with undemanding Alibaba's current valuation. Based on the possibility that the macro economy may strengthen, Alibaba's stock price may also have room to ascend. The broker expected Alibaba's 7% shareholder return rate and continued capital inflows from southbound investors to provide downside support for its shares. The market may look past Alibaba's results for 2QFY25 in light of expectations of more macro stimulus, but may pay more attention to management's outlook. The highlights of the upcoming results may include the prospects for recovery of GMV of the Taobao Tmall Group, the competitive landscape, the pace and room of a take-rate uplift and an updated buyback plan after the recent rapid share price rally. Taking all these factors into account, UBS raised its target price for Alibaba's US stock from USD112 to USD140, and for its H shares from HKD109 to HKD136. The broker reaffirmed its Buy rating. AAStocks Financial News |
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