The Stealth Reason Why Alibaba Group Holding Limited (BABA) Is Hot

A handful of technical analysis tools are suggesting that Alibaba Group Holding Limited (NYSE:BABA) overall gets 24% Buy rating. The stock is also flashing a Hold from the Barchart TrendSpotter trading system. Traders hoping to speculate on the BABA’s short-term trajectory should know that short terms indicators for the stock averaged 60% Buy with an average daily trading volume over the past 20 days at 21222301 shares. BABA stock has overall a 0.5% Buy signal considering medium term indicators and the 50-day average daily volume remained almost 21450285 shares. It’s also worth noting that the stock, whose average daily volume over the 100 days prior to this writing was 22259904 shares, is 67% Sell on the basis of long term indicators.

The share price is currently staying around the first support level of $156.47. Below this, the next support is placed in the zone of $153.59. Till the time, the BABA stock trades above this level, bulls have nothing to fear. On momentum oscillators front, ‘RSI’ has touched 58.25 on daily chart, which may remain a cause for concern. If the price breaks below $153.59 level on closing basis, then we may see more profit booking and the stock may show further weakness. On the flipside, hitting the $161.01 mark may result into a pull-back move towards $162.67 level.

Alibaba Group Holding Limited (BABA) is projected to climb by 27.71 percent over the next 12 months, according to price target estimates compiled by finviz. Meanwhile, they have set a $260-month high price target. This represents a whopping 63.17 percent increase from where shares are trading today. The 12-month median price target assigned by the analysts stands at $200, which represents a return potential of 25.52 percent when compared to the closing price of the stock of $159.34 on Wednesday, November 28. The lowest price target for the stock is $162 — slightly more than 1.67 percent from BABA’s current share price.

Here’s a rundown of insider trading activity for sense of Alibaba Group Holding Limited (NYSE:BABA).

BABA shares accumulated 2.88 points or 1.84 percent on Wednesday to $159.34 with a light trade volume of 20.735 million shares. After opening the session at $159.01, the shares went as high as $159.8 and as low as $155.26, the range within which the stock’s price traded throughout the day. The firm is left with a market cap of $410 billion and now has 2.57 billion shares outstanding. Alibaba Group Holding Limited (BABA) stock has gained 19.46 percent of market value in 21 trading days.

Analysts at The Benchmark Company lifted target price for shares of Alibaba Group Holding Limited (NYSE:BABA) but repeated their Buy recommendation for the stock in their opinion released on November 05. The price target has been raised from $220 to $205. Nomura analysts again handed out a Buy rating to BABA stock but they lifted target price for the shares in a flash note to investors on October 29. The price target has been raised from $224 to $202. Nomura, analysts launched coverage of BABA stock with a Buy rating, according to their flash note to investors on October 29. Analysts at Macquarie are sticking to their Outperform recommendation. However, on October 23, they lifted target price for these shares to $225 from $250. Analysts at Macquarie, made their first call for the stock with a Outperform rating, according to a research note that dated back to October 23.

BABA stock has a trailing 3-year beta of 2.29, offering the possibility of a higher rate of return, but also posing more risk. The portion of a company’s profit allocated to each outstanding share of common stock was $3.32 a share in the trailing twelve months. The stock’s value has fallen -7.59 percent year to date (YTD) against a decline of -14.65 percent in 12 month’s time. The company’s shares still trade -24.73 percent away from its 1-year high of $211.70 and 22.51 percent up from 52-week low of $130.06. The average consensus rating on the company is 1.6, on a scale where 5 equates to a unanimous sell rating. In short, the mean analyst recommendations are calling this stock a buy.

Shares of Alibaba Group Holding Limited (BABA) are trading at a P/E ratio of 60.55 times earnings reported for the past 12 months. The industry BABA operates in has an average P/E of 36.78. Its P/E ratio went as low as 18.27X and as high as 53.42 over the 5-year span. Further, it is sporting a 9.14 on the Price-to-Sales ratio. Compare this with the industry average P/S of 8.52. 49.2 percent is the gross profit margin for Alibaba Group Holding Limited and operating margin sits at 18.2 percent. Along with this, the net profit margin is 19.4 percent.

BABA will be declaring its Q3 financial results on February 04. Analysts are forecasting revenue to climb 44 percent to $17.2B in the next fiscal quarter, while earnings are seen soaring by nearly 6.54 percent to $1.63 per share. History has shown that shares in Alibaba Group Holding Limited have gone up on 9 different earnings reaction days and are predicted to add 0.03 percent when the company reports upcoming earnings. In last reported earnings results, it earned $1.38 per share, better than the $1.07, adjusted, expected by Thomson Reuters consensus estimate. Revenue was $85.1B, worse than the $86.5B analysts expected. Earnings are estimated to increase by 44.4 percent this year, 29.81 percent next year and continue to increase by 4.02 percent annually for the next 5 years.