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Alibaba's Revenue Concerns Prompt Target Cuts from JPMorgan and Morgan Stanley

Analysts from JPMorgan Chase & Co. and Morgan Stanley have both lowered their price target for Alibaba Group Holding Ltd. This is due to concerns about the company's sales figures.

September 30, 2022
3 minutes
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Analysts from JPMorgan Chase & Co. and Morgan Stanley have both lowered their price target for Alibaba Group Holding Ltd. This is due to concerns about the company's sales figures.

Alibaba's sales outlook for the September quarter is deteriorating due to weak consumption in China, analysts including Alex Yao wrote in a note this week. JPMorgan lowered its target price for Alibaba's US-listed shares to $135 from $145, marking the bank's latest call on China's technology stocks after switching its views several times this year.

According to a research report from a bank, Alibaba's weakening revenue outlook in the near term could continue to weigh on the share price. The report states that market sentiment is driven by sentiment-driven fund flow, and that the key to recovering from this is a revenue recovery.

Meanwhile, Morgan Stanley has also reduced its Alibaba share price forecast for this week to $110 from $140, citing weak consumer demand and soft merchant sentiment.

In mid-March, JP Morgan caused a stir in the industry when it called the sector “uninvestable” in a report that more than halved Alibaba’s price target. Bloomberg reported that JPMorgan editorial staff had asked for the word to be removed before publication. However, since then, the bank has been lifting the company’s price target and upgraded the sector in May due to an improved regulatory environment.

An investor who followed Yao's recommendations on US-listed Alibaba would have lost 67% over the past year, the worst performance among analysts following the stock, according to Bloomberg-compiled data.

In a recent report, Yao and his team said that macroeconomic headwinds in China may limit improvement in Alibaba's core sales, given low visibility of a recovery in consumer sentiment and Covid policy relaxation. Customer management revenue, which accounts for a significant portion of its overall sales, may drop 4% on year in the third quarter following a 5% second-quarter fall, they added.

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Bryan Curtis
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Eric Ng
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John Liu
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Bryan Curtis
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