Alicia Yap, Citi analyst, lowered the price target Alibaba (NYSE:) To $177.00 Per Share from $200.00

Yap points out that China’s prolonged lockdowns of cities will negatively impact the economy, and Alibaba’s profits growth in FY4Q22.

Our belief is that the COVID effects will continue into FY1Q23. This could delay the CY2H22 recovery trends. We believe that Alibaba’s cost optimization initiatives across internet peer networks have also led to a slowdown in investment subsidies. BABA mgmt stated last quarter that its expectation is for investment losses in Taobao Deals, and Taocaicai will decrease gradually over the next quarters. Yap explained that EBITA growth would remain in check if merchant support continues. Yap added that the revs mix shifting towards loss-making or lower margins will continue to affect overall EBITA growth.

Alibaba shares, according to the analyst, are still attractive, given that there is US$15.8bn of REPO remaining, strong cash flow generation, historical trading, and close proximity to historic troughs.

In order to account for March lockdowns the analyst has updated revisions/non GAAP profits estimates for FY4Q22, FY2022- FY2024, by -0.1%/-21.9%, 0.0%/-3.5%, and -1.4%/-25.8% respectively.