The ADS (American Depositary Share) of Chinese tech giant Alibaba has more than doubled from its 52-week low of $58.01. The spike in BABA stock can be attributed to the easing of regulatory headwinds. Beijing’s crackdown on its tech giants is over, signaled Guo Shuqing, the Chairman of China’s Banking and Insurance Regulatory Commission, supporting the jump in Chinese stocks, including Alibaba.
Along with the easing regulatory measures, the expected rebound in consumption in China and improving margins also drove BABA stock higher. Citigroup analyst Alicia Yap expects a faster-than-expected recovery in China’s consumption story, supporting the upside in BABA stock. Yap raised the price target on BABA stock to $160 from $144.
Meanwhile, Barclays analyst Jiong Shao expects Alibaba to benefit from the growth in its gross merchandise volume in the March quarter. Moreover, Shao expects BABA’s December quarter margins to improve.
Alibaba’s focus on improving operating performance through cost optimization is working well. During the last quarter’s conference call, Alibaba said its adjusted EBITA margin expanded by 3%, which is encouraging.
The technology company is optimizing its capital resources and prioritizing growing businesses that are in line with its long-term revenue growth and profitability profile. However, the uncertain global macro environment could pose challenges for Alibaba.
Is Alibaba a Buy or Hold?
Alibaba stock commands a Strong Buy consensus rating on TipRanks despite the recent surge in its price. It has received 16 unanimous Buy recommendations. Moreover, the analysts’ average price target of $138.53 implies a further upside of 18.42%.
Besides for BABA, shares of Pinduoduo (NASDAQ:PDD) and Tencent Holdings Limited (TCEHY) have also doubled from their 52-week lows.
