New price target set at $201
Deutsche Bank analysts expect Alibaba (BABA) stock to sprint to $201.00 in the next 12 months. The firm earlier projected a price target of $158.00 for Alibaba stock. On July 11, the stock was trading in the vicinity of $144.30.
Deutsche Bank analysts, led by Alan Hellawell, revised their price target on Alibaba stock upward after they met with the company’s management for two days in London. Deutsche Bank has a “buy” rating on Alibaba stock.
Opportunity to leverage data for growth
The Deutsche Bank analysts hiked the price target on Alibaba and maintained a bullish rating on the stock. They believe the company has huge potential to leverage the massive data at its disposal to fuel e-commerce growth.
In addition to the several marketplaces it operates, Alibaba also runs several platforms for digital video and other operations. Through these platforms, Alibaba can garner insights on consumer behaviors. The e-commerce giant can tap into that knowledge to help brands improve their customer targeting, which could lead to more e-commerce transactions.
Why Alibaba needs to boost e-commerce growth
Alibaba’s primary source of income is e-commerce, contributing 82.0% to its overall revenues in fiscal 4Q17.[1. fiscal 4Q17 ended March 2017] Alibaba’s overall revenues grew 60.0% in fiscal 4Q17, as shown in the chart above. The company is guiding current fiscal year revenue growth in the range of 45.0%–49.0%.
As Alibaba seeks more growth, rival JD.com (JD) is gunning for its market share domestically. Internationally and to a limited extent in China, Alibaba is battling e-commerce competition from Amazon (AMZN), eBay (EBAY), and Walmart (WMT). It remains to be seen whether data can help Alibaba bolster its position among its competitors.