In a report released yesterday, Alexis Yan from Morgan Stanley maintained a Sell rating on Alibaba Health Information Technology, with a price target of HK$4.20.
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Alexis Yan has given his Sell rating due to a combination of factors impacting Alibaba Health Information Technology’s financial outlook. Despite the company’s efforts to maintain a solid growth trajectory, there are concerns about the sustainability of its revenue and profit growth targets. The company’s guidance for FY26 suggests a potential deceleration in growth, with revenue expected to increase by 10-15% year-over-year and adjusted net profit by 20-30%. This indicates a slowdown compared to the first half of the fiscal year.
Additionally, while Alibaba Health’s first-party sales have shown promising growth, the third-party revenue growth remains modest. The company’s reliance on flash sales and the need for significant investment in fulfillment infrastructure could pressure operating margins. Furthermore, the competitive landscape, particularly with rivals like JD Health, poses challenges to Alibaba Health’s market position. These factors collectively contribute to the Sell rating, as they present risks to the company’s ability to achieve its financial targets and maintain its competitive edge.