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As in the past two years, Alibaba (NYSE:BABA) 2023 brought mostly disappointment on the stock market front. That means the stock is currently down 36% year over year.
However, looking at the Chinese tech giant’s prospects, Jefferies analyst Thomas Chong believes BABA still has a lot to offer investors.
“We expect BABA to drive AI innovation and unlock synergies across TTG (Taobao Tmall Group) and cloud,” the analyst said. “We see BABA’s strategy intact and continuing to return value to shareholders after announcing its three-year goals.”
While the value may not be as tangible given the recent lack of profits, the company is working hard to restructure its business, and Chung expects the changes to yield results going forward. ing.
One of the big changes is the appointment of Eddie Wu as CEO of TTG, Alibaba Group’s biggest source of revenue, replacing Trudy Dai, who is involved in founding an asset management company. “We expect the company to focus on managing non-core assets in order to increase capital returns to shareholders,” Chung said. “We believe these moves have the potential to create further synergies after his three-year goals have been set for the various business units.”
Looking ahead to Alibaba’s December quarter results, Chung expects year-on-year sales growth to reach 260 billion yuan, at 5%, down from the previous forecast of 7%. By segment, Chong expects TTG’s revenue to grow by only 1% year-on-year (compared to previous expectations of 5.5%), reaching RMB128 billion. Meanwhile, CMR (customer management revenue) is expected to remain flat, reaching 91 billion yuan, in contrast to the 3% increase expected in advance. Additionally, Chong believes GMV (gross merchandise) will grow 3% year over year, which is higher than his previous forecast of 1%.
“While the slowdown in CMR to GMV growth is primarily due to changes in product mix, Taobao and Tmall’s respective usage rates are likely to increase year-on-year,” Chong explained. Did.
Alibaba International Digital Commerce Group (AIDC) should see more growth than previously expected. Sales are expected to increase by 41% year-on-year compared to 29% previously, with Chong citing “better-than-expected sales momentum and adoption of AIDC’s outsourcing model for its cross-border division”. commented.
Overall, Chong rates BABA stock a Buy, but lowers his price target from $145 to $133. Nevertheless, the revised numbers still factor in ample upside of around 84% from current levels. (Click here to see Chong’s track record)
Most analysts think along the same lines. BABA stock claims a consensus rating of “Strong Buy” based on a combination of 18 buys and 2 holds. At an average target of $122.30, investors can expect a return of up to 69% after one year. (look Alibaba stock price prediction)
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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. Content is for informational purposes only. It is very important to perform your own analysis before making any investment.
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