Alibaba Stock Price has Upside Potential, Analysts Say

Alibaba (NYSE: BABA) stock price is well set to extend a bullish trend, according to market pundits. The stock price rose close to 40% year to date from its 52-weeks low of $130 a share.

Despite trade war headwinds, the company has been enhancing investor’s confidence through its robust financial numbers and investment strategies. Alibaba stock price is currently trading close to $180. Fortunately, the market pundits expect the acceleration of the bullish trend.

BABA Alibaba Group Holding Limited daily Stock Chart

For instance, Jefferies analyst Thomas Chong has set a price target of $216 – with a buy rating. The analyst praises revenue growth from cloud computing segment. Its cloud-computing revenue grew 66% year over year in the latest quarter. The revenue growth is driven by an increase in average revenue per paying user.

Baird’s analyst Colin Sebastian provided an Outperform rating – with a price target of $195. The analyst is optimistic about future fundamentals.

Colin Sebastian said, “the earnings results showed cheering signs of growth from lower-tier cities along with impressive operating leverage.” The analyst sees prospects for Alibaba stock price appreciation amid the high revenue growth and margins.

The company has generated 42% revenue growth in the latest quarter. Its user base grew to 674 million annual active consumers. This represents a growth of 20% from the year-ago period. Moreover, it has the capacity to turn significant revenue growth into big profits. Its adjusted EBITDA rose 34% year-over-year in the latest quarter.

Daniel Zhang, Chief Executive Officer of Alibaba Group said, “We will continue to expand our customer base, increase operating efficiency and deliver robust growth.”

The company has been aggressively looking for new revenue growth drivers. Consequently, Alibaba has recently announced to buy Koala for $2 billion from Chinese gaming company NetEase.

In addition, Alibaba is also looking to invest $700M in Netease’s music streaming arm.

Its cash flows are offering a room for investment in organic and non-organic growth opportunities. The company has generated $5 billion in operating cash flows while its free cash flows were standing close to $3.8 billion.

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Based in Saudi Arabia, Siraj has a strong understanding of and passion for accounting and finance. He has worked for international clients for many years on several projects related to the stock market, equity research and other business, accounting and finance related projects. Siraj is a published financial analyst on the world's leading websites including SeekingAlpha, TheStreet, MSN, and others.

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