By Sam Boughedda
Morgan Stanley analysts issued a Research Tactical Idea call on Alibaba (NYSE:BABA) shares in a note to clients on Tuesday, with the firm believing the "share price will rise in absolute terms over the next 60 days."
The analysts, who have an Overweight rating and a $150 per share price target on the stock, explained the call is because the stock has traded off recently, making the short-term valuation "much more compelling."
"We point to: 1) an inflection in customer management revenue (CMR) on the back of consumption recovery in China; and 2) announced corporate restructuring to unlock Alibaba's value as we believe it will shift the market's perspective to value the company on a sum-of-the-parts perspective," the analysts wrote.
"Valuation looks attractive at 9x F2024e P/E and ex-cash P/E of 7.5x. Alibaba has ~US$21bn remaining in its share repurchase program (effective through March 2025)," they added.
Morgan Stanley views BABA as a key beneficiary of China's reopening and a proxy for inflows to China from global investors.
"We estimate that there is about an 80%+ (or "highly likely") probability for the scenario," declared the analysts.