BABA
Alibaba Group Holding Limited
$130.00
Stable Earnings Power
65%
P/Adj-EPS × Normalized Multiple
Mild
·
Conviction
Fair Value
Trading 4.3% below fair value
You pay
$130.00
Bear
$118.92
Fair
$135.91
Bull
$152.89
Bear
$118.92
-8.5%
$6.57 × 14x P/E
Fair
$135.91
+4.5%
$6.57 × 16x P/E
Bull
$152.89
+17.6%
$6.57 × 18x P/E
Key Value Driver
Normalized P/E multiple (16x base case)
Implied Market Multiple
19.8x
Summary
Our base-case estimate uses a valuation based on adjusted earnings per share and a normalized price-to-earnings multiple. We then blend that result with the average analyst price target of $193.20 from 59 analysts, using a 35% weight on analyst consensus. That produces an estimated intrinsic value of $135.91 per share.
Warnings
The company pays out 88% of its profits as dividends. That leaves little cushion — the dividend could be cut if business slows down.
Wall Street's average price target is $193.20 (from 59 analysts). Our estimate is 46% below the consensus -- consider that gap carefully.
Financial statements were converted from CNY into USD using USDCNY at 0.1474 USD per CNY.
Key Risks
- Growth DCF inappropriate — terminal value assumptions dominate
- EV/EBITDA misleading for regulated businesses where capex is mandated
- Regulatory risk is a fat tail not visible in normal multiples