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UBS Analyst: People Should Be Buying Alibaba Shares

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Alibaba Group Holding Ltd (NYSE: BABA) shares have tumbled more than 7 percent in the last five days over recent reports of fake listings on the website and shares are down more than 25 percent in the last three months. However, many analysts consider this slump a buying opportunity for investors.

Among them is UBS Managing Director Eric Sheridan, who has a Buy rating on the stock. Sheridan was on CNBC Wednesday to explain why he is bullish on the stock.


“We think people should be buying the shares here,” Sheridan said. “A lot of what has happened over the last one to two months is that some of the optimism from the IPO has worn off – as likely happens with a lot of technology IPOs.

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“We are now into the more of the blocking and tackling part of the Alibaba story. We believe growth is still going to be good; we think it's reasonably valued against growth here on a going forward basis, and as a result of that, we will be buyers of Alibaba right here.”

Focused On Fixing Things

Sheridan was asked what he thinks about the recent reports highlighting the fake listings and volumes on Alibaba. He replied, “Since the IPO, there has been a lot of things that have been highlighted via the prospectus and going forward about what happens at Alibaba as a marketplace, really, where people meet each other to exchange goods and money online.”

He continued, “There's a lot of things you can do to control people coming into that environment; there are some things you have to learn as you go and correct that behavior. What we believe Alibaba is doing – and it's been highlighted by their conversations with the Chinese government as they have stated them publicly – that Alibaba is very focused on fixing things as they come to light in their marketplace.

“It frankly is no different than some of the growing pains eBay went through in the early days of its marketplace in the 1990s,” Sheridan remarked.

Latest Ratings for BABA

Oct 2016CitigroupMaintainsBuy
Sep 2016Deutsche BankMaintainsBuy
Sep 2016Daiwa CapitalMaintainsBuy

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