On Wednesday, March 15, Baird analyst Colin Sebastian maintained his Outperform rating on Alibaba Group Holding Ltd (NYSE:BABA) shares along with a price target of $116. In his updated research note issued to investors yesterday, he suggested that in BABA’s inaugural tech summit, the management has confirmed group’s emphasis on sustained innovation and its commitment to technology leadership. The news is likely to positively impact Alibaba shares, which have already gained 18.08% since the beginning of the year.
Mr. Sebastian further commented in his note that the management had issued plans to support future growth of the company. He stated, “At Alibaba's "New Technology, New Future" summit, held in Hangzhou on March 9, management unveiled its plan to form independent research and development teams to support future growth and investment in core technologies.” Nonetheless, BABA shares declined slightly by 0.54% during the active trading session yesterday.
Colin continued to add that the $254.25 billion company’s announced investments reinforce the firm’s positive long-term view. This is because Baird believes that this opens numerous growth opportunities for Alibaba in areas including cloud computing, e-commerce, digital payments, logistics, and media.
The e-commerce giant has already ensured its clear commitment to designing cutting-edge technology with employment of over 20,000 engineers. However, with new research and development efforts, Jack Ma hopes to give more refined focus to his staff. According to Colin, the efforts will also “turn the company's projects from figurative ‘hand grenades’ to ‘missiles.'” Also, these advances in R&D are expected to benefit the business’s broader platform via thorough integration of BABA’s existing services and products.
Alibaba’s consensus price target stands at $125.55, implying 21.1% upside potential over the last close. Of the total 45 analysts covering the stock at FactSet Fundamentals, 37 recommended the shares as Buy, three suggested Overweight, whereas five analysts advised holding the stock