Courtesy of Benzinga.
Alibaba Group Holding Ltd (NYSE: BABA) is worth $130 per share, at least according to a sum-of-the-parts analysis conducted by Rob Sanderson of MKM Partners.
Sanderson’s calculations derived a value for Alibaba’s Commerce business at $94 per share, the Cloud business at $18 with a marked-to-market or book value for other assets.
“We remain bullish on the stock and think Alibaba will be the best performing large-cap in the Internet sector over the next 12-months,” Sanderson noted.
Core Commerce
Sanderson noted that he values Alibaba’s core commerce segment at 25x his calendar year 2017 net profits forecast, which is still considered “low for a growth asset” within the e-commerce segment. The analyst also assumed “little” margin expansion through next year — an assumption which “may be conservative.”
Cloud Business
Sanderson’s valuation model also assumes the Chinese cloud total addressable market will become a $20 billion market within five years and the company controls a “dominant” 65 percent share. At a 28 percent operating margin, the analyst expects Alibaba to realize $3 billion in net profit over the time frame.
Also, Sanderson is assuming a 30x forward multiple for the segment in four years and, when discounted, back at 25 percent to 2017.
Other Segments
Ant Financial is a “gem” given recent valuation rounds, which valued the company at $60 billion and contributes $8 per share.
The marked-to-market value of publicly traded companies in Alibaba’s portfolio are worth $12.7 billion today, or $5 per share.
Finally, Alibaba holds interests in over 100 private companies, “many” of which could prove to be long-term winners. However, the analyst valued these companies as contributing zero value toward Alibaba’s stock for the time being.
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Latest Ratings for BABA
Date | Firm | Action | From | To |
---|---|---|---|---|
Aug 2016 | RBC Capital | Maintains | Outperform | |
Aug 2016 | JP Morgan | Maintains | Overweight | |
Aug 2016 | Jefferies | Maintains | Buy |
View More Analyst Ratings for BABA
View the Latest Analyst Ratings
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