Alibaba Has 63% Upside And Room For Margin Expansion, Bullish Analyst Says

Mizuho analyst James Lee reiterated a Buy on Alibaba Group Holding Limited BABA with a $160 price target.
The re-rating followed an investor call with Alibaba leaving him confident about the margin expansion story.
He expects September quarter GMV growth to improve from June to 5% Y/Y and positive change in December as demand for discretionary products pick up during Singles' Day promotions with the reopening of the supply chain.
Lee anticipates the cancellation rate to drop in the back half of CY22 as shipping capacity becomes normalized, resulting in increased profitability.
He expects lower-tier market investments to moderate losses, offering ample room for margin expansion, which could potentially add 10 points to margin long-term.
The analyst said the management should focus on EV and financial services, which have the most significant demand for data.
BABA appears to have a competitive advantage in financials due to its experience supporting Alipay and Ant Group.
In EV, the company has an investment stake in XPeng Inc XPEV.
For the public sector, security is essential, so BABA offers private cloud solutions.
Lee expects the TAM for these projects to be large and well-funded.
Price Action: BABA shares traded lower by 0.47% at $97.53 on the last check Monday.
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