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Alibaba shares target cut, retains Buy rating on recent quarterly reports

EditorNatashya Angelica
Published 05/15/2024, 11:19 AM
BABA
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On Wednesday, Mizuho issued an update on Alibaba (NYSE:BABA) Group Holding Limited (NYSE:BABA), adjusting the stock price target for the company's shares to $92.00, a decrease from the previous $95.00 target. The firm upheld its Buy rating on the stock despite the adjustment.

Alibaba's recent quarterly report showed positive signs, with Gross Merchandise Volume (GMV) gaining momentum due to effective price discount strategies. The company's China commerce margins remained steady even as they navigated a shift towards a platform offering lower-priced items.

Still, the company's consolidated Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITA) was impacted by long-term investments in its international ventures and logistics arm, Cainiao.

In light of these factors, Mizuho adjusted its forecast for Alibaba's fiscal year 2025 consolidated EBITDA, reducing the estimate by 7% to 195 billion RMB. Moreover, the firm introduced a new fiscal year 2026 EBITDA estimate of 213 billion RMB. The revised stock price target of $92 is based on a six times multiple of the new fiscal year 2026 EBITDA projection.

The report highlighted Alibaba's ongoing share buyback program, which is valued at approximately $30 billion. Mizuho's assessment considers the company's valuation attractive, with the stock trading at five times the projected fiscal year 2026 EBITDA. This valuation takes into account the current economic and geopolitical risks, which the firm believes are already reflected in the stock's price.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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