Read Why Atlantic Equities Downgraded Alibaba and Cut Price Target by 24.3 Percent

An Alibaba Group sign is displayed at the Las Vegas Convention Center in Las Vegas, Nev., on Jan. 5, 2017. (David Becker/Getty Images)

Atlantic Equities analyst James Cordwell downgraded Alibaba Group Holding Ltd. to Neutral from Overweight with a price target of $140, down from $185. The new price target implies a 21.7 percent upside.

While the stock is “inexpensive,” the plans detailed at the company’s recent investor event provide little confidence that Taobao and Tmall’s performance will improve near term.

Further, management’s commitment to “ongoing aggressive investment” has left the analyst less optimistic regarding renewed capital allocation discipline.

While external capital raising for some divisions “could admittedly close some of the valuation disconnect” short of an AliCloud spin, such developments “would only be modest catalysts.”

By Anusuya Lahiri

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