BABA
Alibaba Group Holding Limited
$113.39
Stable Earnings Power
65%
P/Adj-EPS × Normalized Multiple
Mild
·
Conviction
Fair Value
Trading 14.9% below fair value
You pay
$113.39
Bear
$116.55
Fair
$133.21
Bull
$149.85
Bear
$116.55
+2.8%
$6.58 × 14x P/E
Fair
$133.21
+17.5%
$6.58 × 16x P/E
Bull
$149.85
+32.2%
$6.58 × 18x P/E
Key Value Driver
Normalized P/E multiple (16x base case)
Implied Market Multiple
17.2x
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 $185.00 from 59 analysts, using a 35% weight on analyst consensus. That produces an estimated intrinsic value of $133.21 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 $185.00 (from 59 analysts). Our estimate is 43% below the consensus -- consider that gap carefully.
Financial statements were converted from CNY into USD using USDCNY at 0.1478 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