Bernstein analyst has initiated his coverage on Alibaba Group Holdings Ltd (BABA) stock with an Outperform rating

Published By: Myrna Salomon on January 11, 2017 12:59 pm EST

Bhavtosh Vajpayee initiated coverage on Alibaba Group Holding Ltd (NYSE:BABA) stock today, with an Outperform rating accompanied by a 12-month price target of $117. The analysts’ price target offers about 21% upside as compared to the current levels.

Mr. Vajpayee mentioned in his research note that the e-commerce giant is dominating the industry in China, and is enjoying its position. The company, due to its efficient and effective policies, has earned an early lead in the payments and cloud space. Jack Ma’s company is also tapping the international markets and is exploring the videos arena as well.

Bernstein’s analyst also expects the revenue stack to stimulate growth for a much longer time period than several industry experts may forecast. In addition to this, Mr. Vajpayee elaborated that in the locus of the investment firm’s coverage, the e-commerce titan is expected to “stay north of 20% annual revenue growth even three years hence.”

For the shorter term, the analyst forecasts that the investment in videos may hamper the margins. Furthermore, his estimates remain above the projections of the Wall Street’s consensus estimates for revenue. However, Mr. Vajpayee remains behind the consensus estimates for margins for the upcoming quarters.

Bernstein’s analyst said: “While Alibaba arguably has a more complex organizational structure, we believe that the longevity of its bets will be gradually appreciated, driving stock performance.” Alibaba stock currently trades at between the 52-week range of $59.25 and $109.87, and has a total market capitalization of $243.45 billion. The average trading volume of the e-commerce company is 10.95 million per share.

Alibaba stock trades at $96.25, down about a meager 0.54% as of 12:11 PM EST. So far this year, the stock has already climbed around 10%, outperforming the S&P 500 Index’s gain of 1.48% over the same time span.