Alibaba's Share Price Recovery Earns It Bullish Calls From Some Brokerages

Some of Wall Street's biggest brokerages have reiterated their bullish calls for Alibaba Group Holding Limited BABA, indicating more gains after it surged from a mid-March low, Bloomberg reports.

Over the past week, more than ten brokerages, including Citigroup and Goldman Sachs, have reinforced their buy calls. Speculation over relaxation in the tech sector crackdown buoyed bets on Alibaba, which has seen its shares in Hong Kong soar over 60% from the March low, beating the Hang Seng Tech Index, which gained 38%.

Also Read: Here's How Alibaba And Others Fared In China's June Shopping Extravaganza

"We expect Alibaba's market share loss to gradually stabilize and remain constructive on the company's ability to expand its total addressable market," Goldman analysts noted. Goldman also acknowledged that Alibaba recently drafted business strategies for merchants and analysts. 

Jefferies said Alibaba addressed some "pain points" for its merchants and highlighted its efforts to support consumers in Shanghai during Covid lockdowns.

JPMorgan saw some respite for the Chinese stocks like Alibaba and others following relaxation in lockdowns and regulatory pressures. While near-term uncertainties continue, fundamental headwinds like the zero-Covid policy, tight fiscal policy, and strict regulation were cyclical rather than structural. It also saw the bad news already priced into Chinese equities and expressed optimism over the policy makers and the central bank, further easing the monetary policy.

However, DZ Bank analyst Manuel Muehl, deemed Alibaba's most accurate predictor, continues to remain bearish as capital expenditure ramp on by Chinese tech companies amid the crackdown affected their free cash flows. He saw a challenging upcoming quarter that will reflect the impact of the lockdowns on consumer spending and advertising budgets.

JD.com, Inc JD JD Retail CEO Xin Lijun acknowledged that regulation is not necessarily easing, but it is becoming more stable.

Alibaba's March quarter revenue beat consensus despite fierce competition from JD.com, Pinduoduo Inc PDD, and the demand slowdown triggered by the pandemic.

Price Action: BABA shares traded lower by 0.92% at $119.03 premarket on the last check Wednesday.

Photo by Rico Shen via Wikimedia Commons