BABA ๐๐ ๐๐๐๐๐ ๐๐๐ฟ๐๐๐๐ผ๐๐๐๐ฟ ๐๐ป
PRICE TARGET: $181 --> $189
POTENTIAL UPSIDE: +39% โ
"Alibaba remains an attractive opportunity considering the 10% growth of China commerce and the 25%+ growth of Cloud"
ASSUMPTIONS:
LTM Revenue: $138.995B
(๐ข๐ด๐ด๐ถ๐ฎ๐ช๐ฏ๐จ ๐๐๐/๐๐๐ = ๐ฉ.๐ค๐ข)
5Y Revenue CAGR: 8% --> 10%
2030 Profit Margin: 16%
2030 PE Ratio: 18
Shares outstanding: 2.393B
Shares reduction: 3% --> 2%/year
VALUATION:
Q1 2030 $BABA SHARE PRICE =
138.995 * (1.10)^5 * 0.16 * 18 /
[2.393 * (0.98)^5] = $298
You can now choose the discount rate that you prefer, for Alibaba I want to use 12%
ACTUAL PRICE: $136
FAIR VALUE: $169
PRICE TARGET (1Y): $189
POTENTIAL UPSIDE: 39%
EXPECTED RETURNS: 17.0%/year
DIVIDEND YIELD: 0.8%
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