Alibaba loses Conviction Buy status at Goldman on sales growth, profit concerns
$Goldman Sachs(GS.US$ is lowering $Alibaba(BABA.US$ stock to Buy from Conviction Buy as the company boosts spending.
Analyst Piyush Mubayi is cutting the price target to $215 per share from $252.
The stock is slightly lower in premarket trading.
"At the time when retail spending slows down and competitive intensity levels up, BABA has been increasing investments to 1) acquire new users, 2) build multiple traffic sources, and 3) raise merchant subsidies in the shorter term," Mubayi writes in a note.
"We expect revenue growth (ex. SunArt) to decelerate to 13%/16% in 3QFY22E/4QFY22E, with CMR revenue growth in 2HFY22E 3.3% yoy vs. 3.4% in 2QFY22. The lower CMR monetization rate and stepped-up strategic investments will drag profitability over the next 2 quarters before growth recovers in FY23E, when both revenue/earnings grow >20%."
But Goldman still expects the company to continue "aggressive buybacks."
Last week Warburg cut its valuation of Ant Group.
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Robbie Showen : Goldman Sachs is EXTREMELY late with this call.
What is the point in giving a downgrade if you are going to give it AFTER the stock is down by over 50%.
Useless.
I guess the buybacks are the only thing that can save this stock. Eventually, it has to find a floor.
TCFIT_365 Robbie Showen: Of course it will find a floor. I keep buying small amounts
Mooncity : Goldman traders always do opposite of their recommendations. Buy.
James Browny : Why to linger in BABA and if it make sense if BABA share price touch 1000 by 2025 at least. Its just mentality to stay in BABA while news reminding us everyday good or bad. Instead similar returns or less with comfort, I moved my BABA holdings to MELI. of course I entered baba in 140
Selected one : Oh nobody mentions Amazon eCommerce lost money last quarter. Compared to Amazon, baba looks great while trading 1/7th of the valuation.
Lashell Liffick : $215 PT is still good for me.
muchtime Lashell Liffick: What about the de listing risk?
Rubyyo : But still a buy, just to clarify........
lululalabb : Is GS the perfect contrarian indicator? It is strange that people still pay attention to GS.
70126348 muchtime: Existence is complete, zero is the end
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