Alibaba Group Holding Ltd.'s (BABA) stock has been having a good run in recent weeks as a string of Wall Street analysts either initiated coverage or reiterated their bullish stance on the Chinese ecommerce giant. But not everyone one is jumping on the bandwagon, with Standpoint Research telling investors to do the opposite: Sell the stock.
On Thursday, Standpoint Research analyst Ronnie Moas cut his rating on Alibaba to sell from buy, pointing to valuation as a reason for investors to trim their position in the stock. In a research note to clients, which was covered by Barron’s the analyst said investors should trim their holdings from a full weight position to a half weight position. (See also: Can Facebook and Alibaba Rally This April?)
That Was Then, This Is Now
“This completes my third time in-and-out of this name. Previously, I closed this position out with gains of 29% (2015) and 25% (2016). Most recently, I reinstated Alibaba on the 9th of January and it has already jumped by more than 20% for us,” wrote the analyst. “The stock is now at an all-time high and fairly valued at 33X. I can no longer leave my highest recommendation attached to this name given the absolute and relative move it has made recently.”
Since the start of the year, Alibaba’s stock has gained more than 27% as analysts have expressed optimism about its prospects, not only with ecommerce but in other businesses, including its AliCloud cloud computing offering. Recently shares were down 0.55% or $0.61 to $112.35.
The call out of Standpoint Research comes at a time when the bulls are out in full force for Alibaba. Last week, Benchmark initiated coverage with a buy rating and $140 price target, with analyst Fawne Jiang’s PT implying the stock could gain an additional 34%. In a research note to clients covered by Barron’s, the analyst called Alibaba a “core holding” and said it provides investors with access to ecommerce growth and gives them exposure to a “market leader” as the internet moves into the era of big data. Jiang said Alibaba is morphing its business model from ecommerce services to a “full-spectrum ecosystem providing everyday service elements to consumers and helping reshape and develop China and global commerce.” (See also: Alibaba Diversification Earns Analysts' Approval.)