Freedom Capital has downgraded Alibaba Group Holding Limited (BABA) to 'Neutral' from 'Outperform,' citing heightened regulatory and competitive risks, even as it increased its price target to $180 per share. The move reflects a nuanced shift in the firm’s outlook despite a bullish price target.
- Freedom Capital downgraded Alibaba (BABA) to 'Neutral' from 'Outperform'
- Price target raised to $180 per share, up from $150
- Core concerns include regulatory risks, competitive pressures, and slower revenue growth
- BABA’s domestic retail revenue grew 7% YoY; cloud revenue rose 11% YoY
- Net profit declined 22% due to restructuring and new investments
- The stock implies ~18% upside based on the new price target
Freedom Capital has adjusted its rating on Alibaba Group Holding Limited (BABA) to 'Neutral' from 'Outperform,' signaling reduced confidence in the stock’s near-term performance despite a higher price target. The firm cited ongoing regulatory scrutiny in China, intensifying competition in e-commerce and cloud computing, and slower-than-expected revenue growth in core business segments as key concerns. These factors have prompted the firm to temper its earlier optimism, even as it maintains a positive long-term view on Alibaba’s valuation potential. The revised price target of $180 per share represents a significant increase from the prior target of $150, suggesting that Freedom Capital still sees substantial upside in Alibaba’s intrinsic value over the medium term. However, the downgrade underscores a strategic recalibration: the firm now views the stock as fairly valued at current levels, with risks outweighing rewards in the near term. The $180 target implies approximately 18% upside from the stock’s trading price at the time of the report, based on public market data. Alibaba’s recent financial results show a 7% year-over-year revenue growth in its domestic retail segment, while cloud revenue grew 11%, though both figures lagged behind expectations set by some analysts. The company also reported a 22% decrease in net profit due to restructuring costs and investment in new business lines like AI and logistics. These trends are consistent with broader challenges facing Chinese tech firms amid economic headwinds and policy shifts. The downgrade impacts institutional investors and retail traders following the stock, particularly those using rating-based strategies. Market reaction was muted, with BABA shares fluctuating within a narrow range post-announcement. Analysts note that the move reflects a broader trend of cautious optimism toward Chinese equities, with valuation upside perceived but risk premiums rising.