Sign InSummary
Alibaba Group Holding Limited's stock (BABA) is expected to see a price increase in the near future due to positive technical and fundamental analysis, as well as the resolution of regulatory challenges in China, indicating an undervalued stock with upside potential. (July 7, 2023)
Overview
Alibaba Group Holding Limited (BABA) trades on the NYSE and closed at $90.55 on July 07, 2023, marking an 8.00% increase or a change of $6.71. The highest and lowest prices for the day were $91.57 and $86.64, respectively.
The highest price point it touched in the course of the year is $125.84, and the 52-week low is $58.01. Currently, Alibaba has a market capitalization of $232.03 billion with a trading volume of 46.52 million, above its average volume of 19.31 million shares.
Technical Analysis
Alibaba's 50-day moving average stands at $84.81, and the 200-day moving average is $88.34. Currently, the stock is trading above both these averages, indicating a bullish trend. The RSI14 (Relative Strength Index) value is 46 - a neutral position. It's neither overbought nor oversold. Meanwhile, the MACD (Moving Average Convergence Divergence) for the past three months is 1.40, indicating positive momentum.
Fundamental Analysis
With earnings per share (EPS) of $3.76 and a Price/Earning (P/E) ratio of 24.08, Alibaba's valuation seems relatively decent, although a bit higher when compared to its historical average. The company has 2.56 billion shares outstanding. The upcoming earnings announcement is expected on 08/02/2023.
The Discounted cash flow (DCF) value is currently $163.71, suggesting the stock is undervalued at the current price. Analysts' target high for the stock is set at $300, with a target low of $83.89. The consensus target is $174.58, and the median target is $163.50. All these targets suggest upside potential from the current price.
News Sentiment
Recent news indicates that China has ended its tech crackdown with a fine on Ant Group, Alibaba's affiliate. This has led to an optimistic reaction from investors and resulted in a significant surge in Alibaba's stock. The crackdown had caused uncertainty, and its resolution should pave the way for the stock's upward movement.
Outlook
Given the technical and fundamental analysis, as well as the easing of regulatory challenges, Alibaba Group Holding Limited's (BABA) stock could potentially see a price increase in the coming trading day and also in the following week. The stock's current price indicates undervaluation, and the regulatory clarity should encourage more investor participation.
Evaluation
The current analysis suggests a Buy for Alibaba Group Holding Limited (BABA). The company is trading above its key moving averages, indicating bullish sentiment. Further, the end of the tech crackdown in China removes a significant overhang, leading to positive sentiment around the stock. Finally, based on the DCF and analysts' target prices, there seems to be upside potential from the current levels. It is important for investors to consider their risk appetite and investment horizon before making a decision.
