Baird Bullish on BABA in the Next "Battle For e-Commerce"

BABA shares are set for a higher open thanks to Baird's bull note

Mar 29, 2019 at 9:23 AM
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Chinese tech giant Alibaba Group Holding Ltd (NYSE:BABA) is trading up 1.5% before the open, thanks to bullish analyst attention out of Baird. The brokerage firm lifted its price target to $195 from $178, citing what it sees as an undervalued asset in Alibaba's Lazada e-commerce business. Baird pointed to Lazada's footprint in Southeast Asia, a region it deemed the next "major battleground for e-commerce" and a huge growth opportunity due to its large population.

To be sure, most of Wall Street is already very bullish on BABA stock, with 21 of 22 covering firms recommending to buy it. Similarly, the consensus 12-month price target is $204.69. The shares traded as high as $211.69 back on June 5, but pulled back all the way to the $130 area by the end of 2018. So far in 2019, the equity has been on the rise, closing Thursday at $177.73.

There's been little interest from the options pits lately, with put and call open interest both holding near 52-week lows. What's more, the stock's 30-day at-the-money implied volatility of 25% ranks just 2 percentage points from an annual low. In other words, speculators are pricing in relatively low volatility expectations for near-term contracts. With that in mind, it's also worth noting that Alibaba has a Schaeffer's Volatility Scorecard (SVS) of 90 out of a potential 100, showing a strong tendency to surprise the options market with outsized moves.

 

 

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