Alibaba Will Be Critical Beneficiary Of China’s Reopening and Economic Recovery, Analysts Say

• Mizuho analyst James Lee maintained Alibaba Group Holding Ltd (NYSE: BABA) with a Buy and cut the price target from $160 to $155.

• The ongoing COVID restrictions and slow macro has extended the 2H22 GMV recovery curve.

• As a result, GMV and CMR growth heading into the December quarter remained challenging and tracked below the Street.

• However, management executed well on margins by reducing costs in China commerce and across all business segments, exceeding expectations during the quarter.

• With China gradually reopening into CY23, he feels GMV growth should recover, and downward revision risks appear limited.

• Given the slower recovery trajectory, he trimmed his F25E Consolidated EBITA by 1% to 219 billion RMB.

• BABA is an attractive turnaround story in Lee’s coverage.

• Barclays analyst Jiong Shao reiterated Overweight with a $114 price target.

• With the Chinese government having pivoted its policies on Covid in recent weeks, BABA’s September quarter results, while broadly in line, were less relevant.

• BABA and its e-commerce peers are among the critical beneficiaries of China’s reopening and economic recovery in 2023E.

• Citigroup analyst Alicia Yap maintained a Buy and reduced the price target from $146 to $144.

• UBS analyst Jerry Liu reaffirmed a Buy and cut the price target from $140 to $135.

• HSBC analyst Charlene Liu reiterated a Buy and slashed the price target from $132 to $124.

• Benchmark analyst Fawne Jiang maintained a Buy and reduced the price target from $206 to $180.

• Truist Securities analyst Youssef Squali reiterated a Buy and cut the price target from $125 to $120.

• Price Action: BABA shares traded lower by 4.80% at $80.19 on the last check Friday.

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