Analysts Slash Price Targets On Alibaba On Dismal Q2 Performance, Outlook

Analysts cut their price targets on Alibaba Group Holding Ltd BABA following Q2 disappointment and outlook. Morgan Stanley analyst Gary Yu lowered the PT to $180 from $220, implying a 25.3% upside, and kept an Overweight upon its lowered FY22 outlook.

Demand headwinds, competition, and investments lead Yu to cut his profit forecasts for FY22, FY23, and FY24. Still, he stays at Overweight on the stock as he thinks the current valuation underrepresents the value of Alibaba's cloud and international businesses.

Baird analyst Colin Sebastian lowered the PT to $180 from $260 and kept an Outperform. The analyst said challenges continue as the company adjusts to new regulatory policies in China compounded by slowing retail sales and increasing competition in the home market.

He sees few near-term positive catalysts for shares. Still, a December investor day should help reset growth and margin expectations and provide more visibility into management's critical areas of strategic focus.

Stifel analyst Scott Devitt lowered the PT to $170 from $210 and reiterated a Buy, implying an 18.4% upside. The rating follows the company's weaker than expected fiscal Q2 results due to slower growth in its core business lines, updated FY22 outlook offset in part by an increase in Cloud and International Commerce.

Truist analyst Youssef Squali lowered the firm's price target on Alibaba to $200 from $230, implying 39.3% upside, but kept a Buy rating.

The weaker results reflect a "material cooling" in China and its impact on Alibaba's platform, as well as the investments the company is making to onboard active buyers and capture a greater share of wallet across its existing and emerging platforms. However, the long-term thesis on the stock "remains compelling."

Mizuho analyst James Lee lowered the PT to $215 from $245, implying a 49.7% upside, and keeps a Buy. Despite facing headwinds, Alibaba plans to continue to invest in lower-tier markets using a multi-app strategy while defending its core market share leading to lowered FY22 outlook.

Citi analyst Alicia Yap lowered the PT to $234 from $240, implying a 63% upside, and keeps a Buy. Following substantial slowdown of NBS retail data for the past two months, it is not surprising that Alibaba "printed a missed quarter."

CLSA analyst Elinor Leung lowered the PT to $250 from $273, implying a 74.1% upside, and maintained a Buy.

Price Action: BABA shares traded lower by 0.52% at $142.86 in the premarket session on the last check Friday.