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[Company news]Morgan Stanley Raises Target On Alibaba To $130.60

More Posted time:Jul 4, 2016 16:57 PM
Morgan Stanley Raises Target On Alibaba To $130.60

Morgan Stanley’s Robert Lin believes AliCloud will drive meaningful value forAlibaba Group Holding Ltd BABA 0.15% by FY20.
Lin maintains an Overweight rating on the company, while raising the price target from $119.30 to $130.60.

Transforming To A Data Company
“Alibaba is leading the upgrade of the entire digital marketing plus commerce value chain in China,” the analyst mentioned.

The company has been able to successfully transform itself into a mobile commerce company over the last two years, connecting digital commerce, entertainment and media.

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Lin believes now the foundation has been laid to transform Alibaba into a leading data commerce company, and it is able to leverage big data and cloud computing to upgrade all its businesses, customers and ecosystem partners.

“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,” Lin pointed out.

Monetization Potential

The analyst noted that the company’s Unified ID asset tracks and analyzes users’ digital footprint across platforms and screens, and with more than 500 million Unified IDs, Alibaba now covers a majority of the Internet users in China.

According to the Morgan Stanley report, “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.”

Lin values AliCloud at $39 billion, and expects AliCloud’s revenues to reach Rmb58 billion by FY20, implying a CAGR of over 89 percent during FY16–FY20.

“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,” the analyst said.

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