Daiwa cuts Alibaba's target price by 5% to $180, expecting cloud business growth to accelerate to 45% year-on-year by the end of June.

Morgan Stanley has lowered Alibaba's target price for its US stocks from the original $190 to $180, a decrease of 5%, while reiterating their overweight rating and top stock view. The bank stated that with the recent pullback in stock prices, the current valuation is attractive, equivalent to a 13 times P/E ratio for the fiscal year 2028; whereas the latest target price derived from the discounted cash flow method corresponds to a 23 times P/E ratio for the fiscal year 2028. Morgan Stanley noted that due to the increased contribution from cloud business, revenue forecasts for fiscal years 2027 to 28 have been raised by 2-3%, but partially offset by lower revenue from the e-commerce business. EBITA forecasts remain largely unchanged. The bank expects Alibaba's cloud business to accelerate by 45% year-on-year in the first quarter of fiscal year 2027, ending in June, and believes that cloud business growth will continue to accelerate in the coming quarters. Excluding some one-time Spring Festival promotion expenses, Morgan Stanley expects Alibaba's losses in all other aspects to narrow to 16.5 billion yuan in the first quarter of fiscal year 27. It is anticipated that with the soaring token prices, expenses related to training the Alipay model will remain considerable. Expected losses in all other aspects for fiscal year 27 are estimated to reach 72 billion yuan.