UPDATE: JPMorgan Double Upgrades Alibaba (BABA) to Overweight

May 16, 2022 3:30 AM EDT
Get Alerts BABA Hot Sheet
Price: $113.27 -0.36%

Rating Summary:
    34 Buy, 6 Hold, 2 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 4 | Down: 12 | New: 10
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(Updated - May 16, 2022 5:10 AM EDT)

JPMorgan analyst Alex Yao upgraded Alibaba (NYSE: BABA) from Underweight to Overweight with a price target of $130.00 (from $75.00).

The analyst comments "Alibaba’s share price corrected 13% in the past two weeks vs. MSCI China -3% and underperformed ecommerce peers such as JD and PDD. We attribute the share price weakness to concerns on domestic ecommerce slowdown on the back COVID in China and Alibaba’s relatively higher exposure to discretionary categories. We acknowledge potential earnings downside risk and we cut our FY23E revenue/EPS again by -1%/-2% (the 4th cut YTD) to 7%/12% below Bloomberg consensus estimates. However, we turn more positive on the stock as 1) ecommerce is one of the COVID early cycle verticals, 2) ecommerce stock enjoys 2 share price drivers (multiple re-rating and positive earnings revision) once the market looks through COVID and starts to revise up earnings forecasts, 3) Alibaba trades at the lowest P/E multiple within China ecommerce space (10x 2023E P/E on our estimate) and has the most upside potential on margin improvement in 2022, which indicates more share price upside than peers, and 4) we expect adj EPS growth will recover to 30%+ starting from 4Q22 (JPMe 32% adj EPS growth in FY24. Upgrade to Overweight with Dec-22 PT of US$130."

For an analyst ratings summary and ratings history on Alibaba click here. For more ratings news on Alibaba click here.

Shares of Alibaba closed at $87.99 yesterday.


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