Chinese e-commerce giant Alibaba (NYSE:BABA) dipped in trading on Friday after Morgan Stanley analyst Eddy Wang downgraded the stock from Buy to Hold and slashed the price target to $90 from $110. The analyst’s price target implies an upside potential of 20.2% at current levels.
The analyst remained concerned about the company’s slower turnaround regarding its key businesses, including its customer management revenue and cloud business. Wang pointed out that the withdrawal of its cloud business spin-off is resulting in uncertainty when it comes to unlocking the value of this business.
Furthermore, Wang added that the absence of capital management catalysts without cloud distribution impacts the previous bullish thesis for the stock.
In contrast, the analyst’s top pick in the Chinese e-commerce sector is PDD Holdings (PDD), as it expects to gain market share further. Wang noted, “We expect PDD to continue to gain share in the domestic market thanks to its favorable business model amid consumers’ behavior shift.”
The analyst has a Buy rating on PDD stock and a price target of $170. Wang’s price target implies an upside potential of 17.9% at current levels. Shares of PDD have soared by more than 20% over the past five days alone following a blowout Q3 performance.
Is BABA a Buy, Sell, or Hold?
Overall, analysts remain bullish about BABA stock with a Strong Buy consensus rating based on 18 Buys and two Holds. Year-to-date, BABA stock has slid by more than 15%, and the average BABA price target of $125.26 implies an upside potential of 72.6% at current levels.
