Alibaba stock just suffered the biggest 5-day selloff in its history, but Susquehanna analyst stays ‘positive’

Shares of Alibaba Group Holding Ltd. bounced Wednesday, to put them on track to snap the worst five-day performance in their public history, as Susquehanna analyst Shyam Patil slashed his price target but continued to push his “positive” view on the China-based e-commerce giant.

The stock
BABA,
+0.70%
rose 0.7% in midday trading, toward the first gain in six sessions.

The stock had plunged 20.6% over the past five sessions to close Tuesday at the lowest price since Jan. 3, 2019. Some of the factors weighing on the stock included regulatory concerns and macroeconomic pressures in China, topped off with disappointing fiscal second-quarter results reported last week.

That five-day selloff was by far the biggest since the stock went public in September 2014. The previous weakest five-day run, prior to the current stretch of losses, was the 16.3% tumble through Aug. 20, 2021.


FactSet, MarketWatch

Susquehanna’s Patil lowered his stock price target to $200 from $310, but his new target still implies nearly 50% upside from current levels. He also reiterated the positive rating he’s had on Alibaba at least since February 2020.

“[Alibaba] has been dealing with regulatory overhang, and now the slowing macro in China is pressuring the business in the near-term,” Patil wrote in a note to clients. “Although COVID may continue to cause periods of softness in the near-term macro, we continue to view [Alibaba] as the China e-commerce category killer with a large secular growth opportunity and maintain our long-term-oriented positive view.”

Of the 52 analysts surveyed by FactSet who cover Alibaba, no less than 36 have cut their stock price targets since Alibaba reported earnings on Nov. 18. That has lowered the average price target to $201.46 from $236.98 at the end of October.


FactSet

Meanwhile, 47 of those analysts, or 90%, are bullish on the stock, up from 89% at the end of October. Of the five analysts who aren’t bullish, only one is bearish and the other four are neutral.

Alibaba shares have plunged 51.9% over the past year, while the iShares MSCI China exchange-traded fund MCHI has dropped 17.7% and the S&P 500 index SPX has rallied 29.0%. Some analysts have pointed to Alibaba’s investor day, which kicks off on Dec. 16, as a potential important catalyst for the stock going forward.

Separately, Susquehanna’s Patil also reiterated his positive rating on China-based search-engine giant Baidu Inc.
BIDU,
-0.19%,
while cutting his stock price target to $175 from $200.

While the company continues to be cautious around the pandemic situation, Patil said his long-term bullish view remains unchanged, as he sees the company as a “leading player in China’s search market, a key player in the feeds market, owner of one of the top video assets in the country and the clear market leader in AI applications.”

The stock slipped 0.1% in midday trading Wednesday. Although it was still up 11.9% over the past 12 months, it has lost more than half its value since closing at a record $339.91 on Feb. 19.

Patil also stayed neutral on China-based e-commerce company JD.com Inc.
JD,
-0.97%,
but raised his stock price target to $95 from $80 in the wake of “solid” third-quarter results, as he sees potential for longer-term upside from its advertising and logistics initiatives and the company’s ability to successfully incubate new businesses.

JD.com’s stock fell 0.7% on Wednesday. It has run up 18.1% over the past three months but has slipped 1.1% over the past year.