Should You Buy Alibaba (BABA) Stock Following the Retail Giant’s Annual Investor Day? This Top Analyst Remains Bullish
Today, Alibaba (BABA) held its first session in its annual “Investor Day,” divulging a lot of information regarding Commerce, New Retail, Digital Media & Entertainment, Infrastructure, and Ant Financial.
Here are a few brief tidbits courtesy of Baird’s top analyst Colin Sebastian:
- The number of registered users on Taobao is accelerating, with growth +88% Y/Y in the month of August.
- Taobao’s significant redesign, which include a “recommendation feed” rather than product listings, is driving higher conversion rates; original product, secondhand and auctions are new areas of growth.
- 94% of product listings on Alibaba sites now include live stream or shortform video content, with purchase conversion rates increasing 58% on listings with video.
- Alibaba’s Hema grocery stores are generating up to 5x the annual sales/store than traditional stores, in large part due to the integration of e-commerce, digital services, local delivery (mature stores 60% sales are online).
- Hema stores also expect drones will be used to lower delivery costs and improve service.
Net net, Sebastian points out that while concerns over pace of investments and margin trends will likely linger, overall the presentations reinforced a positive growth outlook given the ongoing transformation of China’s retail industry in large part led by Alibaba innovations and the convergence of bricks-and-mortar and e-commerce.
Sebastian rates BABA stock an Outperform, with a price target of $215, which represents a potential upside of 34% from where the stock is currently trading.
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, Sebastian has a yearly average return of 28.3% and a 75% success rate. Sebastian has a 31.6% average return when recommending BABA, and is ranked #17 out of 4876 analysts.
How does Sebastian’s bullish stance weigh in against the Street? It appears the analyst is not the only one enthusiastic on this Chinese online retail giant’s prospects, with TipRanks analytics demonstrating BABA as a Strong Buy. Out of 16 analysts polled in the last 3 months, all 16 are bullish on Alibaba stock. With a return potential of nearly 48%, the stock’s consensus target price stands at $236.94. (See BABA’s price targets and analyst ratings on TipRanks)