Alibaba’s stock has been on a consistent decline, with a 10% drop year-to-date, a 39% decrease in the last 12 months, and a substantial 72% decline over the past 3 years. However, analysts are still optimistic about the business, pointing to its strong FCF generation of $27 billion over the last year, leading to what is considered one of the most compelling valuations.
The company has also been proactive in rewarding shareholders, with significant share buybacks and the announcement of annual dividends in November. However, the company has faced challenges, with a reversal of its plan to spin off its cloud division and concerns about management changes in crucial segments of its business. Nevertheless, analysts, particularly Barclays’ Jiong Shao, have reaffirmed an Overweight rating for Alibaba shares, albeit with a lower price target of $109.
While two of Shao’s colleagues prefer to stay neutral on the stock, the majority of analysts have a positive view, with a consensus of a Strong Buy. The average price target indicates a potential 73% premium in the coming year. Despite the challenges, analysts are optimistic about the future prospects of Alibaba.