Alibaba Stock Price Target Cut Again as More Analysts Smile on Rival JD.com

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Alibaba, like its peers in Chinese tech, has been under pressure for much of this year.

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David Baker / Getty Images

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After a year of regulatory pressure and recently disappointing quarterly earnings, Alibaba stock is being revalued by Wall Street.

Some financial analysts are also claiming that the Chinese e-commerce giant’s rival, JD.com,
Might be a better bet.

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Alibaba is facing music. New research from investment group Susquehanna marks the latest installment in this trend, with a team of analysts lowering their outlook for Alibaba stock as they raised their target for shares of JD.com.

Analysts at the investment group, led by Shyam Patil, on Wednesday lowered their price target on Alibaba stock from $310 to $200, but maintained their positive rating. Shares closed Wednesday at $136.52, so the Susquehanna price target is still up about 46%.

Alibaba’s US-listed stock (ticker: BABA) rose 2.2% on Wednesday — it wasn’t trading Thursday because of the Thanksgiving holiday. Shares of Alibaba, which trades in Hong Kong (9988.HK), climbed 2.7% on Thursday. The stock is near its lowest level since late 2018, and is down more than 40% in 2021.

“Alibaba is dealing with a regulatory overhang, and now the slowing macro in China is putting pressure on business in the near term,” Susekhana’s team said.

Patil’s analysis follows Alibaba’s most recent quarterly earnings release — which disappointed investors and analysts alike. The company missed sales and earnings expectations, cut its outlook for the full year, and disclosed how badly profits were impacted by a drop in margins.

Disappointing financial results put pressure on the stock that has already been beaten this year, as well as the rest of Chinese tech. China’s internet giants have found themselves on the wrong side of regulators as President Xi Jinping tightened his controls on the economy, though some experts now believe the worst is over.

But in line with Deutsche Bank analysts and asset manager Needham, Susukhanna’s view is that there are still reasons to be bullish on Alibaba.

“While COVID may lead to a period of near-term macro moderation, we continue to see Alibaba as the killer of the China e-commerce category with a huge secular growth opportunity and our long-term-oriented positive outlook. maintain,” he added. ,

As Patil’s team axed Alibaba’s price target, he raised estimates for competitor JD.com — raising his price target on the stock from $80 to $95 on Wednesday and maintaining a neutral rating on the shares.

US-listed shares of JD.com (JD) slipped 0.1% on Wednesday, with Hong Kong shares of the company (9618.HK) up 0.6% on Wednesday.

With the stock closing Wednesday at $89.36, that means up some 6%. JD.com has climbed 3.5% this year — not a surprising performance by any means, but firmly beating the 25% year-over-year decline for the Hang Seng Tech Index,
Which is down 42% from its all-time high in February.

JD.com’s recent earnings were far more positive than Alibaba’s: The company posted a 25% year-over-year jump in quarterly revenue.

“We continue to like JD’s position in the large and growing Chinese ecommerce market,” Patin’s team said, noting that they “see the potential for long-term upside from scaling its advertising and logistics initiatives, and Like the company’s ability to successfully grow new businesses.”

However, there are some risks ahead for the stock. “Macro, pandemic and supply chain issues will be counterproductive in the near future,” he added.

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