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Alibaba stock slips as Morgan Stanley downgrades after 'negative developments'

Published Dec 01, 2023 11:54
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Alibaba (NYSE:BABA) shares fell more than 1.3% in pre-market Friday trade after Morgan Stanley analysts downgraded shares to Equal Weight from Overweight with a price target cut by $20 to $90 per share.

The downgrade is attributed to negative developments impacting the previous bullish thesis. These include a slower turnaround in Customer Management Revenue and cloud services, the withdrawal of the cloud spin-off introducing uncertainty in value unlocking from reorganization, and a perceived lack of capital management catalyst without cloud distribution.

“Our previous OW thesis on Alibaba was premised on the assumptions of a fundamental turnaround in core businesses, reorganization to unlock shareholder value, and sizeable capital management potential. However, we have turned more cautious on each of the above given recent developments,” the analysts said.

On the other side, the current buyback/dividend is considered to be already reflected in the stock price.

The risks to Morgan Stanley’s latest move include the stronger-than-expected macro recovery and Alibaba’s low-price strategy turning out to be more successful than expected.

Alibaba stock slips as Morgan Stanley downgrades after 'negative developments'
 

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