MKM Partners Still Optimistic on Alibaba’s Long-Term Potential
Alibaba Group Holding Ltd Long-Term Upside Intact
Alibaba Group Holding Ltd. got an optimistic sell-side update yesterday amongst an unstable environment. Rob Sanderson, an analyst at MKM Partners, in his recent research note on Alibaba said that the stock price might not slow much on increasing concerns of Chinese economy. The decision was produced after the end of the sell-side firm’s volume 4 Proprietary surveys of customers in China. MKM Partner rated the company a Buy, with an expected stock price target of $105.
The survey highlighted different sort of aspects; however, the main focus stayed on pending intentions and patterns, preferred sites, shopping preferences, and the latest move to mobile. MKM Partners also gathered opinion of customers regarding the effect of the stock market might have on consumer spending, and finally the long term status for the company.
Slowing Chinese economy gripped international markets earlier this week, which ended up being called as Black Monday.
The survey result showed that almost 77% customers are expected not to cut near term spending on products and services. However, of the total participants, 42% said they are planning to shift spending allocations online. In the meantime, several experts have flagged the importance of a shift in expenditure allocation.
The survey confirms that intentions to spend more are comparatively high, with almost 61% participants expected to spend online in the coming 10 to 12 months. Of the participants, 67% of them voted in favor of the e-commerce giant as their ideal choice to shop online.
The current mobile wave in the country is most likely to further strengthen Alibaba’s position, as the company looks to expand its existence in mobile industry. Consumers are most likely to surge mobile allocation by almost 47% in the coming 12 months.
The sell-side firm informed shareholders that “while country risk remains high and uncertainty may persist in the near term, we believe the investment thesis remains intact and recommend that investors continue to accumulate BABA shares.”
Baba’s stock performance has been significantly disappointing this year. The stock has lost more than 34% of its value. The decline in the share price during the start of the year was because of the company’s internal problems, no outside factor was involved in that. A major strike to company’s credibility came in the form of sale of counterfeit and fake products. Regulators forced Alibaba to clean up its online platform.
Alibaba stock closed at $68.54 after going up by 4.17% on Tuesday August 25.
