Citibank raised its price target for Alibaba Group Holding (09988.HK) to HKD 204 per share and maintained its "Buy" rating, signaling confidence in the company's core profitability.
In a research report, the bank's analysts noted that upward revisions to their China e-commerce EBITA forecasts were a key driver for the price target increase. The positive view comes despite a change in accounting policy expected to pressure reported growth in customer management revenue (CMR). The new policy treats promotional coupons as a contra-revenue item rather than a sales and marketing expense.
Citi forecasts Alibaba's CMR to grow 1.3 percent year-over-year in the fourth quarter of fiscal 2026 and 1.6 percent in fiscal 2027. However, the report highlighted that any pressure on reported revenue growth is expected to be offset by fundamental improvements elsewhere. The bank expects cloud revenue to continue accelerating while losses from the Taobao Instant Commerce division are narrowing faster than previously anticipated.
The target price upgrade from a major investment bank suggests that underlying profitability improvements in Alibaba's key segments are outweighing technical accounting changes. The report aligns with other bullish sector calls, including a recent note from Goldman Sachs that named Alibaba a top pick among China's internet sub-sectors.
This updated forecast points to growing conviction in the recovery of Alibaba's core business. Investors will be watching the company's upcoming earnings releases to confirm if the accelerated cloud growth and narrowing e-commerce losses materialize as projected.
This article is for informational purposes only and does not constitute investment advice.
