Oppenheimer Slashes Alibaba's Price Target, Maintains Outperform

In November, Oppenheimer initiated coverage on Alibaba Group Holding Ltd BABA with an Outperform and a price target of $133 – one of the most bullish cases on the street. Today, Oppenheimer revised its forecast and slashed its price target by 16% to $112.

The move comes in response to Alibaba’s Q4 earnings report last week, which sent the stock 10% lower to levels not seen since its post-IPO trading. The analysts note that Alibaba has robust gross margin values and potential to further monetize services in the future.

The new price target is based on a valuation of 39x the FY16 EPS. Oppenheimer sees FY15 revenues coming in higher than previously forecast at $12.3 billion with non-GAAP EPS at $2.22, up from $2.15. In 2016, however, revenues and non-GAAP EPS expectations were trimmed to $16.3 billion and $2.86.