Advertisement
Alibaba
BusinessMarkets

Analysts trim Alibaba Group’s stock price targets by up to 25% after US$41 billion sell-off due to reorganisation snag

  • At least 16 analysts have reduced their 12-month price targets by 3 per cent to 25 per cent after the stock sell-off last week
  • Stock price is ‘far below its fair value,’ Jack Ma’s office said in statement last week

Reading Time:2 minutes
Why you can trust SCMP
Alibaba Group shares price is displayed on a screen outside Exchange Square in Central, Hong Kong in March 2023. Photo: EPA-EFE
Jiaxing Li
Analysts tracking Alibaba Group Holding have trimmed their price targets for the stock by as much as 25 per cent, driving the consensus average to an all-time low, after China’s biggest e-commerce platform operator altered parts of its business break-up and reorganisation plan.
Advertisement
The stock’s 12-month price target fell 6.2 per cent to HK$124.65 from HK$132.91, with Jefferies, China International Capital Corp (CICC) and Guotai Junan delivering the most aggressive of at least 16 cuts, according to Bloomberg data. The e-commece group last week cancelled a plan to spin off its cloud-computing unit in its quarterly report, triggering a US$41 billion sell-off in New York and Hong Kong.

Jefferies slashed its price target by 23 per cent to HK$140 from HK$181 on Friday while maintaining a buy recommendation, after revaluing the sum of all parts in the group’s business. CICC, China’s biggest investment bank, lowered its valuation by 20 per cent to HK$109 while mainland broker Guotai Junan reduced its target by 25.4 per cent to HK$103.

01:53

Alibaba names co-founder Joe Tsai chairman, in surprise shake-up as Daniel Zhang steps down

Alibaba names co-founder Joe Tsai chairman, in surprise shake-up as Daniel Zhang steps down

“The market’s initial response will be negative,” John Choi and Robin Leung, analysts at Daiwa Capital Markets, said after the announcement. “To drive a re-rating on the stock, we need to see an aggressive shareholder return enhancement, either share buyback or dividend, which we believe will be funded by offloading some of its non-core assets.”

Analysts who tracked Alibaba’s American depositary shares (ADS) also lowered their 12-month price targets, suppressing the consensus by 8 per cent to US$125.92, according to Bloomberg data. One ADS represents eight ordinary shares. Morgan Stanley led the pack by cutting it to US$110 from US$150.

Alibaba is the owner of the South China Morning Post.

Alibaba rebounded 1.6 per cent to HK$74.45 on Monday, while the broader market climbed 1.9 per cent. The stock plunged 10 per cent in Hong Kong on Friday, the worst sell-off since October last year, compounded by US filings showing founder Jack Ma’s family trusts were planning to reduce their holdings.

Advertisement