DBS confirms positive outlook on Alibaba shares

DBS analyst Sachin Mittal maintains his positive outlook on Alibaba Group Holding Limited (HK:9988), predicting potential upside of over 30%. Mittal today reiterated its Buy rating on the stock given the company's strong status as an e-commerce leader in China and its encouraging growth potential in global markets. Overall, the stock has a consensus rating of “Moderate Buy” on TipRanks.

Alibaba Group is a Chinese technology company focused on e-commerce, retail, internet services and technology solutions.

DBS predicts strong growth for Alibaba

DBS is optimistic about the recovery of Alibaba's main e-commerce platforms, Taobao and Tmall, as well as the prospects of its international trading platforms and cloud computing services.

Mittal believes that while Alibaba's market share has fallen, its main e-commerce platforms Taobao and Tmall are starting to recover and are posting double-digit growth. Mittal also expects the EBITA (earnings before interest, taxes and amortization) margins for Taobao and Tmall to stabilize and increase the company's overall profitability.

In addition, Mittal emphasizes that the international trade segment will be an important growth driver for the company in the future. For the quarter ended June 30, 2024, AIDC (Alibaba International Digital Commerce) reported 32% year-on-year growth, reaching 29.3 billion yen. This was driven by increased investment in its AliExpress and Trendyol brands to increase brand awareness in key markets in Europe and the Gulf States. DBS expects international segment revenue to grow at a compound annual growth rate (CAGR) of 23% from FY24 to FY27.

Meanwhile, DBS is also confident in the company's cloud computing business and expects an annual growth rate of 9% over the same period. This growth is expected to be driven by increasing demand for public cloud and AI (artificial intelligence) related products.

TipRanks offers star ranking

According to the TipRanks Star Ranking, Mittal has a five-star rating as an analyst. Mittal is ranked #100 out of more than 9,000 analysts tracked on TipRanks. It has a success rating of 83% and has delivered an average return per rating of 22.6% over the past year.

TipRanks ranks various financial experts based on their success rate, average return, and statistical significance. Users can use this ranking to find and monitor top financial experts while evaluating their performance on specific stocks. This, in turn, can help them discover new investment opportunities.

Are Alibaba shares a good buy?

Alibaba shares have risen 32% since the beginning of the year.

On TipRanks, 9988 stock has received a Moderate Buy rating from analysts, based on four Buy and two Hold recommendations. The target price for Alibaba shares is HK$102.58, which implies a growth rate of 12.35% from the current trading price.

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