According to Stifel, Alibaba Group Holding Ltd (NYSE:BABA) stock is still promising for investors looking for long term returns despite the recent sell-off in the company.
Stifel has added the company to its select list and analyst Scott Devitt holds his buy rating for Alibaba stock with a price target of $220.
Alibaba stock down despite solid Q4
Alibaba stock has been declining and has lost 12% since the company reported its Q4 results. The stock has been pulled down as a result of the on-going trade wars between China and the US as well as doubts regarding its investment in growth and the Altaba Inc. (NASDAQ:AABA) sell-off.
The stock declined despite the company reporting solid Q4 results whereby commission revenue grew as a result of the increase in monetization as well as growth in physical good transactions. The e-commerce platform missed on the 2020 consensus estimate because of the uncertain macro backdrop.
The China-US trade wars will have an insignificant impact on performance
The analyst believes that the company will continue its long term growth trajectory because of secular trends like the growing of the middle class and the shift of the economy towards services that favor the company’s strategy. Equally trade between the US and China contributes a small fraction to the company’s revenue and thus even with the trade wars the company will continue to perform well.
Alibaba is still a promising investment prospect because it is a dominant market share in online shopping as well as its efficient advertising model in its main marketplace businesses Taobao and Tmall. The recent pullback is an opportunity to own stock in the company for investors thinking long-term.
TD Ameritrade Chief Market Strategist JJ Kinahan holds a different view regarding the Alibaba stock and warns investors to be cautious when it comes to acquiring Chinese internet stocks. Kinahan said that when buying this stock you are buying risk and you have to exhibit more risk tolerance.
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