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Alibaba (NYSE:BABA) shares rose more than 3% Monday as analysts at Morgan Stanley named the Chinese Internet and e-commerce giant as its top over tech sector pick.
The Morgan Stanley team, led by analyst Gary Yu, said that investors have “underappreciated Alibaba’s leverage to a consumption recovery in China” due to its retail strength in areas such consumer products like apparel and cosmetics. Yu also said that he expects Alibaba’s (BABA) cloud business revenue to begin growing again in the first quarter of 2024 due mostly to non-Internet industries.
Yu added that Alibaba (BABA) stands to be a “key beneficiary of [an] easing regulatory environment” in China, as Beijing has showed signs of backing off from two years of crackdowns on the operations of companies such as Alibaba (BABA).
“For the past one to two years, Alibaba has been in focus, so we think it could outperform other Chinese Internet stocks as the environment eases,” Yu said.
Yu also added that “any potentially positive regulatory event regarding Ant [Group]” such as restructuring, licensing or a resumption of Ant’s potential IPO “could be a significant positive catalyst” for Alibaba (BABA).
Yu currently holds an outperform rating and $150-a-share price target on Alibaba’s (BABA) stock.
On Sunday, Alibaba’s (BABA) shares in Hong Kong got a big lift as company founder and public face, Jack Ma, gave up his ownership stake in Ant, which had been set to go public in 2020 until Ma’s criticism of the Chinese government got him on the bad side of Beijing officials.
Source: news.google.com
