Analysts recommend buying Alibaba (BABA) despite mixed success predicting stock price movements

From Nasdaq: 2024-06-18 09:30:10

Brokerage analysts have historically shown a strong bias towards positive ratings for stocks they cover, with a 82.4% “Strong Buy” recommendation for Alibaba (BABA). Despite this, studies have shown limited success in using these recommendations to predict stock price movements accurately.

Using the Zacks Rank tool, which bases ratings on earnings estimate revisions rather than analyst recommendations, may provide more reliable guidance for investment decisions. The Zacks Rank assigns stocks to five categories, with a balance among all ranks, offering a more objective perspective on a stock’s potential performance.

While the Zacks Rank and Average Broker Recommendation (ABR) both use a 1-5 scale, they are fundamentally different. The Zacks Rank is updated more frequently and is based on earnings estimate revisions, showing a strong correlation with stock price movements. Brokerage recommendations, on the other hand, may be outdated and influenced by the analysts’ firms’ interests in the covered stocks.

For Alibaba, the Zacks Consensus Estimate for the current year remains at $8.20, resulting in a Zacks Rank #3 (Hold) based on earnings estimate trends. This suggests that Alibaba’s performance may align with the broader market in the near term, indicating a cautious approach despite the positive ABR.

As the U.S. presidential election approaches, historical trends show that the market remains bullish after midterm years, regardless of the election outcome. Zacks offers a free Special Report with 5 stocks poised for significant growth, catering to investors across party lines with diverse opportunities in various sectors.

Highlighted stocks in the Special Report include a medical manufacturer with 11,000% growth in 15 years, a rental company dominating its sector, an energy powerhouse planning a 25% dividend increase, an aerospace and defense standout securing a major contract, and a giant chipmaker expanding its operations in the U.S. Consider downloading the Special Report for potential investment insights.



Read more at Nasdaq: Wall Street Analysts See Alibaba (BABA) as a Buy: Should You Invest?