UBS Analyst Jerry Liu has lowered the price target Alibaba (NYSE:) From $150.00 for near-term headwinds, up to $140.00 per Share

The lowered price target reflects lower estimates for F4Q22 (Mar Q) and FY23 to mirror “incremental Covid-19 related headwinds, on top of regulatory and macro impacts last year.”

Liu expects to see March online retail sales growth decelerating “significantly” amid a spike in Covid-19 cases across China. Alibaba will likely have to reduce costs due to the immediate challenges.

“This will impact supply chains and fulfillment networks, and weaken consumer demand, especially in categories like apparel. The Jun Q will be the bottom for Customer Management Revenue (CMR) YoY growth, compared to the Mar Q. We also assume that the MoM slowdown in growth is offset by the positive YoY comparisons. There are some additional growth impacts to domestic on-demand, international e-commerce, and cloud segments, but we also see improvements later this year,” Liu said in a client note.

The analyst is still positive about BABA shares.

“As consumption in China recovers later this year, we expect Alibaba’s top and bottom line growth rates to accelerate. The stock trades at 10x/9x earnings CY22/23, which we consider attractive, given the average 13% EBIT growth rate in CY23-25 and the limited regulatory risk from here. We also believe that the sector’s cost control is improving. Any positive outcome on ADR listing negotiations between regulators, and to a lesser extent shifting Alibaba’s Hong Kong listing to a primary one could be additional catalysts,” Liu said in a client note.

Alibaba stock is currently down 1.5%

By Senad Karaahmetovic