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Benzinga
Benzinga
Business
Anusuya Lahiri

Here's Why JP Morgan Sees Sharp Upside In Alibaba Despite Cutting Price Target

  • JPMorgan analyst Alex Yao lowered the price target on Alibaba Group Holding (NYSE:BABA) to $180 from $210 and kept an Overweight rating on the shares. The price target implies an upside of 42.1%.
  • The analyst is "turning more cautious" on China's online consumption outlook and cut Alibaba's December quarter customer management revenue growth assumption to negative 2% year-over-year from positive 5%. 
  • Yao forecasts the negative CMR growth will end in the June 2022 quarter, "admittedly with low visibility." 
  • On the other hand, the analyst expects a further sequential step-up in strategic investment in China commerce in the December quarter, followed by a gradual loss narrowing starting from the March quarter. 
  • Yao believes earnings revisions will be the most crucial share price driver of Alibaba in the next few quarters, besides policy stimulus. 
  • The analyst thinks the stock will continue to be under pressure shortly, "despite low valuations."
  • Price Action: BABA shares traded higher by 2.94% at $130.35 in the market session on the last check Friday.
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