Investment banks lower the target for Alibaba shares by record 18 weeks

Инвестбанки снижают цель по акциям Alibaba рекордные 18 недель

Since August, the consensus forecast for the company's shares has decreased from 280 to 200 $. But only one analyst from the 52.

Regulators first

Analysts began to reduce the target for Alibaba shares in the summer. Then the Chinese authorities strengthened control over large companies, such as Tencent, DiDi and TAL Education. Earlier, Alibaba also suffered from the actions of regulators. At the end of last year it became known, that the authorities are conducting an antitrust investigation against the company. As a result of the investigation, the site was accused of abusing its position in the market and issued a fine of $ 3 billion.

Among other things, it turned out, that many Chinese issuers are not Chinese, a offshore-registered companies. Over such, the government of the country has also strengthened control..

As a result, in August, HSBC lowered its target for Alibaba shares from 270 to 250 $, UBS - from 280 to 260 $, and Susquehanna from 350 to 310 $.

Then a bad report

After quarterly report, which the company published 18 November, experts continued to revise their forecasts. Retailer's core income, which generate digital trading platforms Taobao and Tmall, compared to 2020, it grew by only 3%. For comparison: a year ago, the growth was 20%.

Analysts and Alibaba itself explained such results by competition in the online retail market and weak growth in consumer spending.. The company also lowered its forecast for sales growth in the 2022 fiscal year from 30 up to 20-23%.

Within seven days after such a report, Alibaba securities fell by 15%, from 162 to 137 $, and many banks have changed their expectations. Morgan Stanley lowered its share target from 220 to 180 $, Bank of America – from 254 to 209 $. But Susquehanna radically revised its forecast - from 310 to 200 $. All because of the threat of regulators and the slowdown of the Chinese economy, told in Susquehanna.

Last week 36 of 52 analysts lowered their goals. According to FactSet, the average target for Alibaba shares fell to 200 $.

Late forecasts

Analysts' forecasts can be taken into account, but it is unlikely that decisions should be made on their basis. Often, as in the case of Alibaba, experts update expectations after the fact, when the main risks are already embedded in the share price.

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And vice versa, analysts may be overly optimistic, if there are no visible risks. A year ago, when the plans of China's leaders were not known, and Alibaba's shares were worth 300 $, investment banks only raised their goals.

Despite the revision of forecasts, most investment banks recommend Alibaba shares. So, of 52 analysts advise to buy 47, sell — one.

Already 16 December Alibaba will hold an investor day. Probably, at the event, the company will talk about future growth points, and also about, when will her strategic investment in the business pay off?.

In the meantime, the retailer's shares continue to fall in price on the news about regulators.. According to Bloomberg, The Cyberspace Administration of China has offered the carrier DiDi to leave the New York Stock Exchange, because it is concerned about a possible data breach. In the premarket, DiDi shares fall on 7%, Alibaba shares — on 3%, to 132 $.

Инвестбанки снижают цель по акциям Alibaba рекордные 18 недель

Fall 2020: Alibaba shares are worth 300 $

Loop Capital 280 $ ➝ 350 $
Goldman Sachs 315 $ ➝ 350 $
China Renaissance 315 $ ➝ 355 $
Royal Bank of Canada 300 $ ➝ 335 $

280 $ ➝ 350 $

Fall 2021: Alibaba shares are worth 140 $

KeyCorp 250 $ ➝ 200 $
Stifel 210 $➝ 170 $
Mizuho 245 $ ➝ 215$
Baird 260 $ ➝ 180 $
Truist 230 $ ➝ 200 $
Needham 330 $ ➝ 230 $

250 $ ➝ 200 $

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