No doubt about it -- this week has been a good one to own stock in Alibaba Group (BABA -1.07%).
So far, Alibaba has benefited from the revelation that Charlie Munger's investment company is buying up shares, as well as a Benchmark note arguing the stock is worth twice what it costs. Today, Alibaba got even more good news (of a sort) when JPMorgan lowered its price target -- but agreed with Benchmark that no matter how you measure it, Alibaba's stock price is still too low.
As of 11:45 a.m. ET, Alibaba shares are up 4.1% on the news, bringing the stock's gains for the week to more than 10%.
In today's note, JPMorgan cut its estimate of Alibaba stock's worth by 14% to $180 per share. That sounds bad, I admit -- but with Alibaba shares trading for only about $130 apiece right now, it still implies a potential 37% gain in the stock price this year.
That's the good news. Now here's the bad:
Echoing Benchmark's worries yesterday, JPMorgan agreed that e-commerce trends in China warrant a "more cautious" outlook. Additionally, JP warned that "customer management revenue" turned negative in December, rather than rising 5% as the bank had anticipated it would. The banker further warned that such CMR revenue will continue to decline through June 2022 -- and there's "low visibility" as to whether the slump will end even then.
All of the above has JP thinking that Alibaba stock could remain under pressure for the next few quarters. Still, it doesn't change the analyst's opinion that Alibaba stock is undervalued.