Morgan Stanley analyst Gary Yu has maintained their bullish stance on BABA stock, giving a Buy rating today.
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Gary Yu has given his Buy rating due to a combination of factors that indicate Alibaba’s potential for growth despite some macroeconomic challenges. The Alicloud segment is expected to maintain strong growth, with a projected 35% increase in the third fiscal quarter, driven by high industry demand that surpasses supply. This growth is further supported by the launch of new AI applications, which are anticipated to boost adoption rates.
Despite a slowdown in customer management revenue (CMR) due to a weaker macroeconomic environment, Alibaba’s execution has been better than expected, with a narrowing of QC losses. The company has successfully reduced its UE loss by half, and the QC loss is expected to align with market expectations. Although there is a slight reduction in adjusted EBITA estimates for future fiscal years due to QC investments, the overall outlook remains positive, with a maintained price target based on a DCF valuation, suggesting a significant upside potential.
In another report released today, CMB International Securities also maintained a Buy rating on the stock with a $206.40 price target.