To The Moon

After $Alibaba(BABA)$’s recent decision to split its business into six different groups, its shares surged and also pushed Hang Seng Index up.

After the split, these groups will be able to seek an IPO respectively.

1. Analysts of JPMorgan and Truist upgrade Alibaba’s rating

The stock claims a Strong Buy consensus rating, based on a unanimous 18 Buys. The average target clocks in at $148.35, making room for gains of ~48% over the one-year timeframe.

a. JPMorgan analyst raises $Alibaba(BABA)$ target to $210

JPMorgan said Alibaba's shares could more than double in a best-case scenario after it separates its businesses.

JPMorgan analyst Alex Yao raised his price target on Alibaba's US shares to $210, and insisted Alibaba’s valuation changed after reorganization. Thus, its shares have further upside in the medium to long term.

Analysts at JPMorgan believe

From the perspective of influencing investor sentiment, we liken Alibaba's change to Google's transition to Alphabet, which is clearly a sentiment booster and should push its stock price higher in the near term.

b. Truist analyst raises $Alibaba(BABA)$ target to $130

Truist analyst Youssef Squali believes that this is a material step to unlock shareholder value and diversify risks. He also believes that demand trends have improved materially since the start of the March quarter, driving positive Y/Y growth.

As such, he reiterated a Buy on BABA shares along with a $130 price target.

2. Views from Tiger Community

@JacksNiffler analyzed valuation of 6 businesses after the split and concluded that

Alibaba's valuation should be $527.7 billion, or $203 per share. This is quite different from the previous separate calculation of $130.6.

To learn more about valuation of six businesses, you can click to read How Valuation changes after Alibaba's split?

@Value_investing was not as optimistic as others. The author believed the reorganization was only helpful for e-commerce business, which encountered a bottleneck.

Contrary to the optimistic expectations of analysts, I personally think that Alibaba's organizational changes won’t boost the stock price much.

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