Alibaba Group Holding Limited (BABA) Stock Analysis
Score BBlue Chip · Grade C · Bearish
$132.58
$114.17
-13.9%
7/10
C
Blue Chip
Investment Thesis
Price is above modeled value range. Quality supports holding but not attractive for new positions.
Trading above fair value.
For New Investors
Price above modeled value range
For Current Holders
Quantitative score: neutral
Buy if
- Price drops 15-20% (improves asymmetry)
- Bull scenario catalysts materialize
- Market-wide correction creates opportunity
Sell if
- Bear scenario triggers occur
- Quality metrics deteriorate (ROIC declining)
- Better alternatives emerge
Valuation
Fair Value estimate: $114.17 (-13.9%). Approximately at fair value. (Methods diverge significantly. Conservative estimate shown.)
PEG-Based EPS
$168.27
FCF DCF Model
$102.66
EV/EBITDA
$7.83
Blended Fair Value
$114.17
Confidence
Low
Methods
PEG-Based EPS (conservative), FCF 2-Stage DCF, EV/EBITDA
Quality Analysis
68/120 points
Investable
ROE (3Y Avg)
7.5%
ROIC-WACC Spread
-5.4%
D/E Ratio
0.3x
Current Ratio
1.3x
Interest Coverage
6x
FCF Positive Years
3/3
Quality Flags
- Low ROE: 7.5% (need >15%, got 5/20 pts)
- ROIC spread: -5.4pp (got 0/25 pts)
- Leverage: D/E 0.2x (13/15 pts)
Market Sentiment
Wall Street Consensus
$190.00
+43.3% Upside
40 analysts
Range: $140.00 — $225.00
Rating: Strong Buy
Our model is more cautious than Wall Street.
Trend & Technical
Price ($132.59) is 11.1% below SMA 200 ($149.14). Bearish trend. Caution on entry.
Tech Score 58/100 — Neutral technical picture. Mixed signals across indicators.
Risk & Reward
Asymmetry Ratio
3.77:1
Expected Return
+15.3%
Bull Upside
+37.7%
Bear Downside
-10.0%
Excellent asymmetry: 3.77:1 ratio. Upside significantly outweighs downside.
Verdict: Very Favorable
Scenario Analysis
Bear
Base
Bull
Buy Zone & Action Plan
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AI Executive Summary
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Technical Analysis
RSI, MACD, moving averages, trend signals, and momentum indicators.
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Frequently Asked Questions
What is the fair value of BABA?
Based on our multi-method conviction analysis, the estimated fair value of Alibaba Group Holding Limited (BABA) is $114.17. This is calculated by blending PEG-Based EPS (conservative), FCF 2-Stage DCF, EV/EBITDA and applying a quality premium of 0% based on the company's fundamentals. The confidence level of this estimate is low.
Is BABA a buy, sell, or hold?
BABA currently has a HOLD rating with a conviction score of 7/10. Price is above modeled value range. Quality supports holding but not attractive for new positions. Price above modeled value range.
Is BABA a high-quality stock?
Alibaba Group Holding Limited has a quality grade of C (68/120 points), rated as Investable. Key metrics include ROE of 7.5%, ROIC-WACC spread of -5.4%, and D/E ratio of 0.3x.
What type of stock is BABA?
BABA is classified as a "blue_chip" in our framework. Low dividend (reinvesting): 1.5%, Mature growth: 8.9%, High revenue volatility: 45.5% std dev, Cyclical sector: Consumer Cyclical, Large cap: $307.9B
What do Wall Street analysts say about BABA?
40 Wall Street analysts have a consensus price target of $190.00 for BABA, representing +43.3% upside. Targets range from $140.00 to $225.00. The consensus recommendation is "Strong Buy". Our model is more cautious than Wall Street.
What are the risks of investing in BABA?
The risk/reward asymmetry ratio for BABA is 3.77:1, rated as Very Favorable. Excellent asymmetry: 3.77:1 ratio. Upside significantly outweighs downside. The expected return is +15.3%, with bull case upside of +37.7% and bear case downside of -10.0%.
What is the current trend for BABA?
BABA is in a bearish trend. Price ($132.59) is 11.1% below SMA 200 ($149.14). Bearish trend. Caution on entry. The technical score is 58/100.
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Last updated: May 16, 2026 · Framework version 3.7
This analysis is for informational purposes only and should not be considered financial advice. Always do your own research before making investment decisions.