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A Citi analyst cut the price target on Alibaba (NYSE:BABA) to $141 from $154 to reflect lowered multiples.
However, the analyst remains bullish on BABA stock given “low expectation and near historical trough valuation,” which makes the current stock price look “attractive.” She especially highlighted Alibaba’s ability to generate strong cash flow.
The analyst has also reflected positively on the company’s efforts to reaccelerate growth and offset losses from the challenging macro environment.
“Thanks to BABA’s effort to enhance shopping content recommendation and improve delivery experience, its ability to deepen consumer wallet shares in higher-spending users helps offset consumption cutback by lower-end consumers. We increased our EBITA assumption reflecting continued optimization of investment spend in strategic initiatives and further operation efficiency improvement,” she wrote in a note to clients.
For FQ2, the analyst is below the consensus for revenue – RMB207.3 billion vs. RMB213.1 billion – but above average analyst estimates for non-GAAP net profit (RMB33 billion vs. RMB29.2 billion).
Alibaba shares are down 3% in pre-market Thursday after closing 4% higher yesterday.
