Among the major Hong Kong stocks, analysts remain bullish on Alibaba Group Holding Limited (HK:9988) and predict an attractive upside of over 30%. Recently, analysts from DBS and UOB Kay Hian confirmed their Buy ratings on the stock. These analysts are betting big on the company’s CMR (customer management revenue) growth, which could drive higher revenues in the future. CMR indicates the advertising income and commissions earned on Alibaba’s e-commerce platforms.
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Alibaba is the largest e-commerce player in China and operates Taobao and T-mall. Revenue from the Taobao and Tmall group accounts for approximately 50% of the overall group revenue.
Let’s take a look at these ratings in detail.
DBS Maintains Bullish Sentiment for Alibaba
Last week, analyst Tsz Wang from DBS reiterated his Buy rating on Alibaba stock and sees an upside potential of 32.41%. The analyst is highly optimistic about the company’s international commerce business. Alibaba’s international commerce platforms, including AliExpress, Lazada, and Trendyol, contribute approximately 11% to total revenue. Wang anticipates this segment to achieve a CAGR of 28% from FY24 to FY26.
In China, Alibaba’s commerce revenue, which includes Taobao and T-mall, is projected to grow by mid-single-digits during the same period.
Wang believes CMR will be the key factor driving the share price in the future. He expects a gradual rebound in CMR growth in the upcoming year, driven by increased merchant engagement and higher consumption demand.
UOB’s Positive Outlook for Alibaba
Earlier in April, analyst Julia Pan Meng Yao from UOB Kay Hian confirmed a Buy rating on Alibaba stock. Yao reduced her price target on the stock from HK$100 to HK$92, which now indicates an upside of 27%.
Yao holds a highly optimistic outlook for the fourth quarter of Fiscal 2024. According to the UOB report, Alibaba experienced robust consumption momentum on its platform in January and February 2024, followed by a slight moderation in March. Yao expects 6% year-over-year revenue growth in Q4, driven by improved CMR growth. Yao projects 3% year-over-year growth in CMR for the fourth quarter.
Is Alibaba Stock a Good Buy Right Now?
Year-to-date, Alibaba stock has lost 2.28%. The company has been under pressure due to the uncertain macro backdrop in China and growing competition from low-cost e-commerce giant PDD Holdings (NASDAQ:PDD).
On TipRanks, 9988 stock has received a Moderate Buy rating from analysts, based on five Buy and two Hold recommendations. The Alibaba share price target is HK$95.89, which implies a growth rate of 32.3% on the current trading price.
