Ahead Of Alibaba’s IPO: Cantor Initiates Buy, Sets $90 Price Target
In a special research report released today, Cantor Fitzgerald analyst Youssef Squali initiated a Buy rating on Alibaba Group (NYSE:BABA) with a $90 price target, ahead of Alibaba’s IPO which is expected to be one of the biggest in American history. The Chinese e-commerce giant will list on the New York Stock Exchange Friday under the symbol BABA.
In his special report, Squali wrote, “BABA starts trading today and with it comes the opportunity to invest in China’s largest e-commerce platform, which we believe has the potential to dominate global online commerce over time. We’re initiating coverage of BABA with a BUY rating and $90 PT. We believe that a differentiated pricing model, strong brand, and unmatched scale give Alibaba an unfair competitive advantage relative to peers both in and outside China. While the stock’s not cheap, we believe the company’s outsized growth and margin profiles, if sustained, should support higher valuation over time.”
The analyst added, “Our $90 PT is based on a five-year DCF and implies a relative valuation of 10.2x, 18.3x and 20.6x, EV/revenues. EV/EBITDA, and P/E on 2015 estimates, respectively, an attractive level vs. peers. There are more risks associated with investing in BABA than in U.S. peers, including doing business in China, VIE ownership structure, corporate governance, transparency, and slowdown in China’s economy. Post-IPO lockup expiration also poses a risk to investors.”
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Youssef Squali has a total average return of 33.4% and a 83.2% success rate. Squali is ranked #2 out of 3304 analysts.