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Investing.com - Mizuho has raised its price target on Alibaba (NYSE:BABA) to $159.00 from $149.00 while maintaining an Outperform rating on the stock. According to InvestingPro analysis, Alibaba appears undervalued at its current price of $135, with the stock showing impressive YTD returns of ~62%.
The price target increase comes despite Alibaba’s revenue and EBITA coming in below expectations, which Mizuho attributed to divestitures and increased investments by the Chinese e-commerce giant. The company maintains solid fundamentals with a P/E ratio of 15.6x and healthy revenue growth of 5.3%, according to InvestingPro data.
Mizuho highlighted stronger underlying trends in Alibaba’s Customer Management Revenue (CMR) and Cloud segments, driven by "good execution and solid demand." The firm noted that Alibaba’s integrated commerce and on-demand offerings are generating more traffic and higher frequency, which immediately supports better advertising yield. With a market capitalization of over $300 billion and an overall Financial Health score of "GOOD" from InvestingPro, the company demonstrates strong market positioning. Get access to 12+ additional ProTips and a comprehensive Pro Research Report for deeper insights.
Alibaba’s cloud growth is expected to accelerate in the next two quarters, powered by strong demand for generative AI services. Mizuho believes Alibaba possesses "the best Cloud assets in China" to capitalize on significant industry growth ahead.
The research firm raised its FY28 EBITDA estimate for Alibaba by 3% based on an improved synergy outlook, while noting that investments in Instant Shopping will likely remain elevated as management continues to focus on efficiency improvements.
In other recent news, Alibaba has seen a series of analyst upgrades focusing on its growth in various sectors. Morgan Stanley has increased its price target for Alibaba to $165, highlighting expected growth in the company’s cloud division, Alicloud, which is projected to accelerate to over 30% in the fiscal second quarter. BofA Securities also raised its price target to $152, following a notable 26% year-over-year increase in Alibaba’s cloud revenue, surpassing expectations. Meanwhile, Bernstein adjusted its price target to $160, attributing the change to growth in Alibaba’s quick commerce sector, despite mixed Q1 earnings results. Goldman Sachs set a new price target of $163, emphasizing Alibaba’s focus on artificial intelligence, though they anticipate larger losses in the quick commerce business for the September quarter. Lastly, JPMorgan raised its price target to $170, citing efficiency gains in Alibaba’s food delivery and quick commerce operations, drawing parallels to competitor Meituan’s growth path. These developments reflect a strong focus on Alibaba’s strategic growth areas, as noted by the analysts.
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