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Alibaba Price Target Cut by Baird on Monopoly Investigation

Baird cuts its price target on Alibaba to $285 from $325.

Alibaba  (BABA) - Get Alibaba Group Holding Ltd. Sponsored ADR Report had its price target cut by Baird analyst Colin Sebastian to $285 from $325 as China’s government investigates the internet titan on anti-trust grounds.

The analyst maintained his outperform rating on the stock. 

Alibaba's American depositary receipts traded at $219.32, down 1.18%, in premarket trading Monday. The ADRs dropped 30% from Oct. 27 through Thursday amid the government’s pressure on Alibaba and its payments affiliate Ant Group. Alibaba owns 33% of Ant, the world’s largest financial technology company.

It’s “very hard to predict the outcome” of the investigation, Sebastian wrote in a commentary. It “will not likely result in significant changes to the company’s core business,” he said.

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But stronger regulation “may open the door for competitors, including smaller regional players, to gain market share,” Sebastian said. That could put a small dent in Alibaba’s growth, but won’t have a major impact.

KeyBanc Capital Markets said the major downturn in the stock has generated a juicy buying opportunity, according to Bloomberg. KeyBanc has an overweight rating and a $355 price target.

Meanwhile, Alibaba lifted its share buyback facility to $10 billion from $6 billion. The company’s board authorized the purchases through 2022. The program began earlier in the fourth quarter.

Last month, the Shanghai Stock Exchange suspended a $37 billion listing of Ant Group, which would have been the world's biggest initial public offering.

Regulators said in a statement Sunday they have ordered Ant Group to formulate a rectification plan and implement a timetable for the overhaul of its businesses, including its credit, insurance and wealth management services.