Alibaba Group (NYSE: BABA), a massive Chinese technology corporation, hasn't exactly been making waves in the American stock market as of late. The market's apparent disinterest in Chinese titles has been bad for the company's shares, which has underperformed market indices.
A Morgan Stanley analyst sees that as a chance to purchase it at a lower price. Although he is not overly optimistic about the company, he does anticipate a nearly 19% increase in share price within the next twelve months.
Repurchase frenzy Gary Yu, an analyst at the investment bank, is responsible for the mixed recommendation and price goal. He restated his $85 per ADS price target and equal weight (read: hold) rating on Alibaba stock in a fresh research note from early April. Compared to the most recent closing ADS price of the Asian IT behemoth, the latter is over 19% higher.
This change was made in response to recent news regarding share buybacks by the firm. In the first three months of calendar year 2024, it came clean about buying back 524 million shares of its common stock.
It paid $4.8 billion for this. Compared to Alibaba's typical quarterly expenditure on buybacks recently ($2.6 billion), this is a "meaningful" increase, according to Yu's note.
Last 12-month buyback ($12.5 billion) plus dividend ($2.5 billion for fiscal 2023) would imply 8% yield," he continued, referring to the company's stock potential.
A troubled history, an uncertain future Is it sufficient to justify purchasing the shares, though? The pandemic in China and the government's obvious efforts to limit Alibaba's reach and power have made for a difficult few years for the firm.
Its future is currently unclear due to management's (so far unfulfilled) intentions to split into six distinct enterprises. I don't think this stock is worth buying, even though Yu thinks it should be priced higher.
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