Alibaba Group Holding Ltd., the Consumer Cyclical sector company, was revisited by a Wall Street analyst yesterday. Analyst Lei Yang CFA from CGS-CIMB reiterated a Buy rating on the stock and has a HK$205.00 price target.
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Lei Yang CFA has given his Buy rating due to a combination of factors including Alibaba’s strong performance in its core e-commerce and cloud segments. The company’s China e-commerce revenue showed a notable 10% year-over-year increase, driven by improvements in customer management revenue and gross merchandise value. Additionally, the cloud business demonstrated accelerated growth, with a 30% year-over-year increase in revenue, suggesting a promising outlook for future quarters.
Furthermore, Lei Yang anticipates that the losses from Alibaba’s quick commerce segment have likely peaked and will continue to decline, improving the company’s overall financial health. Despite a slight reduction in the target price due to increased subsidies for instant delivery, the potential for revenue growth in e-commerce and cloud services supports the Buy rating. The analyst also highlights potential re-rating catalysts, such as better-than-expected growth in these areas, while acknowledging risks like increased competition and higher delivery subsidies impacting margins.
In another report released yesterday, Goldman Sachs also maintained a Buy rating on the stock with a HK$199.00 price target.