Chinese technology giant Alibaba (NYSE: BABA) shares dropped 2.4% yesterday following price cuts by various wall street analysts.
JPMorgan Chase & Co. analyst Alex Yao slashed his price target for Alibaba Group stock to $135 (70.76% upside potential) from $145 based on concerns around sales due to the weaker consumption in China. He continues with his Buy recommendation on the stock.
Yao believes that “Alibaba’s weakening revenue outlook in the near term could continue to weigh on the share price despite an unchanged, or even potentially better, profit outlook.”
Credit Suisse analyst Kenneth Fong also decreased the price target on Alibaba to $152 (from $166) and reiterated a Buy rating.
Citigroup analyst Alicia Yap also cut the price target on Alibaba to $146 (84.67% upside potential) from $159 but maintained a Buy rating on the shares.
Yap highlighted that BABA management’s conservative outlook on recovery in the second half has proved right. He has reduced its estimates for BABA’s core commerce business given “the slower sales outlook amid the continued soft macro environment.”
Is Baba a Good Buy?
Despite the price target cuts, the Wall Street community remains optimistic about the stock. Overall, the stock commands a Strong Buy consensus rating based on 17 Buys and one Sell. BABA’s average price target of $149.06 implies 88.54% upside potential from current levels.
Conclusion
Down almost 50% over the past year, BABA stock is trading at historically low valuations. Therefore, the current share price levels present a good buying opportunity.
Read full Disclosure