[Company news]Alibaba (BABA) Fetches Street-High Price Target at Morgan Stanley; Analyst Sees Upside of 76%
Created#More Posted time:Jul 4, 2016 15:49 PM
Alibaba (BABA) Fetches Street-High Price Target at Morgan Stanley; Analyst Sees Upside of 76%Morgan Stanley maintained an Overweight rating on Alibaba (NYSE: BABA) and raised its price target to a Street-high at $130.60 (from $119.30), implying upside of 76%. Analyst Robert Lin thinks AliCloud will drive significant value. Overall, he thinks investors should take a long-term investment view given revenue opportunity and visibility.
"The foundation is set to transform Alibaba into a leading data commerce company that leverages big data / cloud computing to upgrade all of its businesses, ecosystem partners, and customers," said Lin. "Unlike its global peers, Alibaba has businesses that connect the entire value chain of digital marketing and digital commerce, offering a one-stop solution for brands and merchants. More important, its Unified ID asset tracks and analyzes the digital footprint of its users across screens and platforms."
"With 500mn+ Unified IDs, it now covers the majority of China's Internet users. Its monetization opportunity should not be narrowly defined as revenue from GMV, which emphasizes only transactions. Rather, Alibaba is a beneficiary of a much larger addressable revenue pie; we believe it helps its merchants to enhance distribution, marketing, and productivity efficiency," continued the analyst.
Lin added, "We value AliCloud at US$39bn, based on 4.5x F20e P/S; our US Internet team values AWS at US$91bn by applying 5.6x F17e P/S. By F20, we estimate that AliCloud's revenue can reach Rmb58bn, at a >89% CAGR for F16~20; – surpassing AWS's revenue in 2015. We believe our long-term multiple for AliCloud is justified given faster growth and visible revenue opportunity. It has 500k paying customers, including half of the top 35 Chinese 'unicorn' Internet companies. Its value is further supported by the significant positive impacts on all of Alibaba's businesses."
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Shares of Alibaba closed at $74.23 yesterday.