Anyone can throw around target prices...from $95 to $110 or $140....and time frames from the end of 2015 to the end of 2016 or beyond.
A good discipline is simply to start with analysts' estimated EPS for 2015 of $2.82. Consider that this would be 25% growth over 2014. Think about the 2016 estimated EPS of $3.77..That would be 33.7% growth over 2015.
Now pick a reasonable PEG (price/earnings/growth) factor. For BABA, this could arguably range from 1.2 to 1.6. [The 1.2 is, on my opinion a bit low and the 1.6 is probably on the high side.]
Taking PEG of 1.2 times the 2015 growth rate of 25(%). you get a forward PE of 30. Apply that to 2015 estimated EPS and there's a target price of $84.60. (That's $2.82 times 30).
More optimistically, try to PEG ratio of 1.6...a little stretch but probably supportable for a fast growing EPS stream. Apply that to the 2015 EPS growth rate of 25(%), and you get a forward PE multiple of 40. Apply that to 2015 EPS of $2.62, and that gives a price target of $104.8.
Repeat all of this using the same forward PE's of 30-40 applied to 2016 Estimated EPS of $3.77 and you get price targets ranging from $113.10 to $150.80. Also consider that estimated 2016 EPS of $3.77 would represent 33.7% growth over 2015 estimated EPS, so the 30-40 PE multiples are easily warranted.
What I take from this is that the downside price on BABA is likely around $84.60...and this is likely to be seen next week on a pullback...The much better news is that the upside over the next several months is likely to be around $104.80 and is likely to move on to the $113-151 range over the next 18 months or so.
I fully expect there to be a good deal of price volatility if you want to play short-term trades. Or just hold on and watch BABA move on up to $125-150 in the next 18 months or so. That's 44% to 72% growth from $87.
This, in my view, is a heck of an attractive upside vs downside bet with only about $2-3 of downside and a whole lot of upside.
Sentiment: Strong Buy
Loeb's exit was in Q-1. Probably contributed to some of the Q-1 decline.
With that selling pressure out of the way, BABA is more free to edge on up from here.
It's easy to get wildly enthusiastic about BABA and to think of $140-150 target prices in the near future. But we need to remember the market cap is huge-huge and that the insane post-IPO buying is in the past. I do firmly believe BABA's sound management and quarterly performance will drive the stock price up 15-20% this year. That would put it in the $100-105 range. With 7.5 months remaining, the rate of growth in the stock prive would annualize above 30%...Not a bad rate of return.
Okay, I see where you got 38%...Analyst estimates of REVENUE growth in 2014 vs year ago...But EPS growth is projected at only 18.5%...That's the problem. Even giving BIDU at PEG of 1.5. that would calculate to a target PE of 27 and this PE times estimated $7.13 EPS for 2015 calculates to a fair market price of about $198. That's about what Jeffries came up with.
I have no idea why you think taking a 10% position in a small company with a 120 PE ratio will boost the price of company with a $216 billion market cap.
$83 is a very good time to sell if you owned a few thousand shares and you think all the charts and graphs and money streams and stochastics and MACDs and other technical indicators point toward the price going to $78-80. Selling now avoids further losses amounting to thousands of dollars if the stock price goes where all the indicators are pointing. This stock price has not yet reached its realistic and probable downside and huge short positions (50 million shares as of end of May) are waiting patiently to cover when the price gets down another 4-6%. You'll know it's bottomed when you see a few days of 20+ million share volumes---that will be shorts covering.
Price Action -- Looking at the 6-, 15-, 30-, and 50-day moving averages, this looks to me as if there's a fairly good chance that BKR-B will meander its way to $140 or even get to $135 before forming a base. The money flow index also shows no buying strength. I know to Berkshire lovers, this is heresy or it's an insignificant move. My view is that is there's a fair chance of losing another 5-10 dollars per share, step aside and wait for a better entry point. I'm out today at $143.81. I think the biggest risk of being out now is that Berkshire could announce a huge European acquisition at any time. With the dollar so strong, the time is now.
Let's hope earnings well exceed street expectations. As to the crazy daily swings, I think I can shed some light on them. Over 84% of BIDU is held by institutions. This leave very few shares outside institutions to buffer the daily swings. This make BIDU a great playground stock for fast traders, hedge funds, and others who literally can make the stock dance with a series of properly timed and properly structured buy and sell orders. At least this is my opinion. Wish it could be documented.
...And RBC Cap moved its price target to $105 from $110, but still well above Goldman Sachs' target.
"Alibaba its price target cut to $124 from $136 by analysts at HSBC who maintained their "buy" rating, Barron's reports."
"The firm cited minor concerns about pressure on margins from its investment in strategic initiatives, like mobile internet services such as UCWeb and Autonavi, cloud services, and digital content. "
"Another concern is its gross mobile merchandise volume, analysts said. "
"HSBC also cut its revenue estimates for 2016 and 2017 by between 3% and 5%, Barron's noted."
"Despite the price target decrease, Alibaba remains HSBC's top pick in e-commerce due to its dominant ecosystem and scalable business model, analysts noted."
Sounds pretty good to me. And I'm long several hundred shares.
Sentiment: Strong Buy
BABA had about 50 million shares short as of the end of May. EBay had about 15 million short. AMZN, about 5 million shares short. Clearly, sentiment is against BABA and shorts are doing everything they can to drive the price even lower before they cover. Plus, you have the 1.5 billion shares of overhang out there waiting for the end of the final lockup in September.
The stochastics charts I'm looking at show BABA is clearly oversold...But as has been said, a stock can remain oversold far longer than you can remain solvent.
As much as I hat to take the hit, I'm really tired of seeing a $1,000 - $1,500 a day loss on this stock. I'm very near selling my 3K shares and realizing a $9,000 loss.
Any good reasons to stay long at this point? Goldman-Sachs' $95 price target seems pretty far fetched right now. The average targets of $107 or so seem extremely remote...especially if BABA has a lousy conference call and Q2 report in a few weeks.
Why? Giving hundreds of millions to shareholders in buy backs to save a 1.5% dividend yield says Apple has nothing better to do with its money. It's that simple. There a many, many good companies Apple could buy that could return a lot more that 1.5%. Apple has been bullied by Wall Street goons like Icahn to buy back stock instead of investing in making the company bigger and more diversified.
Just my thinking...
Per YaHoo Finance, estimated EPS for 2015 are $7.13, about an 18% YoY increase. With the transition to mobile, R&D investments, competitive climate, etc., one could stretch and assign a P/E of 25...giving a fair market price per ADS of about $178.
Ad this is how BIDU got from 250 to 200. Maybe it will grow from here, but this stock will only respond to quarterly earnings beats and raised outlook. If QII disappoints, look for BIDU to hit $175.
TommyBoy---No need to get snarky. Apple's PE is now a little over 13. BABA's is 57. Forward PE's are 16 and 23 respectively. It looks to me that BABA's PE is already pricing a pretty robust EPS growth outlook. I'll stick with $101-105 price target this year. About $6-9 over Goldman Sachs' target.