Alibaba Group (NYSE: BABA) has been facing some challenges on the U.S. stock market recently, with its stock underperforming market indexes. However, one Morgan Stanley analyst sees this as an opportunity for investors to buy the stock at a discount.
Analyst Gary Yu reiterated his equal weight rating on Alibaba stock with a price target of $85 per American Depositary Share (ADS), which represents a nearly 19% increase from the company’s recent closing price. Yu’s recommendation comes on the heels of Alibaba’s announcement that it repurchased 524 million shares of its stock in the first quarter of 2024, spending $4.8 billion in the process.
According to Yu, Alibaba’s increased buyback activity is a positive sign for the company, as it suggests confidence in its future performance. He also noted that the company’s buyback and dividend yield would imply an 8% return for investors.
Despite the potential upside, Alibaba has faced challenges in recent years, including government scrutiny and management’s plans to split into six separate businesses. This uncertainty may give some investors pause when considering whether to buy the stock.
While Yu sees potential for a price increase, not all analysts are convinced that Alibaba is a strong buy at this time. Investors should carefully consider their options before making any investment decisions.
For more investment insights and stock recommendations, investors can turn to services like The Motley Fool Stock Advisor, which provides guidance on building a successful portfolio and offers regular updates from analysts. The service has a track record of outperforming the S&P 500 since 2002.
In conclusion, while Alibaba may have some upside potential, investors should weigh the risks and uncertainties before deciding whether to invest in the company’s stock.
