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Investing.com - Mizuho (NYSE:MFG) lowered its price target on Alibaba (NYSE:BABA) to $149.00 from $160.00 on Thursday, while maintaining an Outperform rating on the stock. The stock, currently trading at $122.58, is considered undervalued according to InvestingPro analysis, with a "GOOD" overall financial health score.
The price target reduction reflects concerns about margin contraction due to increased competition in local commerce, particularly in food delivery, which is affecting all major players in the sector.
Mizuho expects Alibaba to show "meaningful margin contraction" on a sequential basis in the second quarter, with competitive pressures potentially extending into the second half of 2025 and into 2026.
The firm reduced its June 2025 quarter EBITDA forecast from 55 billion RMB to 45 billion RMB and lowered fiscal year 2027 estimates to 231 billion RMB to account for Alibaba’s 50 billion subsidy program.
Mizuho introduced a fiscal year 2028 EBITDA estimate of 251 billion RMB, with the new price target based on a 9.5x multiple of FY28 EBITDA, down from the previous 10.5x multiple of FY27 EBITDA.
In other recent news, Alibaba’s financial performance and strategic investments have drawn attention from several analyst firms. Susquehanna has maintained a Positive rating on Alibaba, with a $175 price target, following the company’s fourth-quarter results, which showed a mixed performance. Revenues were slightly below expectations, but profitability exceeded projections. Benchmark also reaffirmed its Buy rating with a $176 price target, despite acknowledging near-term margin pressure due to increased investments in Food Delivery and Instant Retail services.
BofA Securities has lowered its price target for Alibaba to $135 while maintaining a Buy rating, highlighting significant growth in food and on-demand delivery orders since the launch of Taobao Insta-shopping. Macquarie has adjusted its price target to $139, maintaining an Outperform rating, and expects continued pressure on e-commerce margins due to a price war in the instant delivery market. Morgan Stanley (NYSE:MS) has reduced its price target to $150, citing substantial investment costs in instant commerce as a contributing factor. These developments reflect Alibaba’s strategic focus on expanding its delivery services and its ongoing efforts in artificial intelligence investments.
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