Alibaba Group (NYSE: BABA) has emerged as a strong technical buy, registering a 39.78% gain since a Trend Seeker buy signal on January 27. With the stock currently trading above key moving averages, investors and analysts are taking a closer look at its potential for continued growth.
Technical Indicators: Strong Buy Signals and Momentum
Barchart’s analysis presents an overwhelmingly bullish case for Alibaba, with 88% technical buy signals. The stock boasts a Weighted Alpha of 79.71+ and has gained 70.19% over the past year. Additional bullish signals include:
- Trend Seeker Buy Signal: Initiated on 1/27, triggering a near 40% rally.
- Moving Averages: BABA remains above its 20, 50, and 100-day moving averages.
- Recent Highs: 12 new highs in the last month, with a 47.78% surge.
- Relative Strength Index (RSI): At 82.67%, indicating overbought conditions but also strong momentum.
- Support Level: $124.59, with the stock recently trading at $125.79.
Fundamental Factors: Valuation and Growth Projections
Alibaba currently holds a market capitalization of $301 billion with a price-to-earnings (P/E) ratio of 16.81. Key growth expectations include:
- Revenue Growth: Projected at 6.16% in 2024 and 8.05% in 2025.
- Earnings Growth: Expected to rise 1.17% this year and 12.59% next year.
- Dividend Yield: 1.29%, adding an income component for investors.
Analyst Sentiment: Mixed Views Amid Market Risks
Despite strong recent performance, analysts remain divided on Alibaba’s outlook.
- Consensus Price Target: $122, with price estimates ranging from $85 to $155.
- Wall Street Ratings: 28 strong buys, 7 buys, 7 holds, and 1 sell.
- Value Line: Sees potential long-term upside but flags volatility risks.
- Morningstar: Cautions that Alibaba is losing market share to PDD Holdings (PDD) and Douyin, citing competitive pressures in Chinese e-commerce.
- CFRA: Rates the stock a Hold, citing policy risks in China as a major concern.
Investment Strategy: Managing Volatility with Stop-Loss Adjustments
Barchart emphasizes the importance of disciplined investing, advising traders to monitor stop-loss levels regularly given Alibaba’s inherent volatility. The stock’s impressive price appreciation aligns with strong technical indicators, yet regulatory and competitive risks remain.
