© Reuters. Alibaba (BABA) cut at Macquarie as defense and expansion caps earnings upside
Alibaba (NYSE:) was cut to Neutral from Outperform by Macquarie Equity Research in a note to clients on Thursday. The firm has an $85.40 price target on the stock.
Analysts told investors that following BABA’s earnings, they see the company balancing defense and expansion, which they believe potentially caps earnings upside for now.
They explained that BABA management is committed to stepping up investments in 2024E to defend its market leadership with EC (domestic/overseas) and cloud the priorities.
“While the soft numbers were somewhat anticipated by the market, we foresee high competitive intensity and macro uncertainty persisting for the time being, which would push BABA into a new investment cycle and potentially blur earnings visibility in upcoming periods,” the analysts explained.
“We see some savings from non-core units to partially offset incremental investments but expect group earnings to enter a declining trajectory, with adj. EBITA -3% yoy in FY3/25E,” added the analysts.
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