Alibaba Group Holding Limited (NYSE:BABA) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's forecasts. The analysts have sharply increased their revenue numbers, with a view that Alibaba Group Holding will make substantially more sales than they'd previously expected.

After the upgrade, the 49 analysts covering Alibaba Group Holding are now predicting revenues of CN¥919b in 2023. If met, this would reflect a reasonable 7.7% improvement in sales compared to the last 12 months. Per-share earnings are expected to leap 50% to CN¥35.02. Prior to this update, the analysts had been forecasting revenues of CN¥921b and earnings per share (EPS) of CN¥35.56 in 2023. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business.

View our latest analysis for Alibaba Group Holding

Analysts reconfirmed their price target of CN¥1,049, showing that the business is executing well and in line with expectations. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values Alibaba Group Holding at CN¥230 per share, while the most bearish prices it at CN¥115. Still, with such a tight range of estimates, it suggests the analysts have a pretty good idea of what they think the company is worth.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Alibaba Group Holding's past performance and to peers in the same industry. We would highlight that Alibaba Group Holding's revenue growth is expected to slow, with the forecast 10% annualised growth rate until the end of 2023 being well below the historical 31% p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 13% annually. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Alibaba Group Holding.

The Bottom Line

The most obvious conclusion from this consensus update is that there's been no major change in the business' prospects in recent times, with analysts holding earnings per share steady, in line with previous estimates. Fortunately, analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data indicates that Alibaba Group Holding's revenues are expected to grow slower than the wider market. Given that analysts appear to be expecting substantial improvement in the sales pipeline, now could be the right time to take another look at Alibaba Group Holding.

Using these estimates as a starting point, we've run a discounted cash flow calculation (DCF) on Alibaba Group Holding that suggests the company could be somewhat undervalued. You can learn more about our valuation methodology on our platform here.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are upgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.