Alibaba Share Price Outlook: EPS Forecast, Technical Indicators, and Valuation Analysis

Alibaba is set to report earnings on Tuesday, 25 November, and the company may face a sharp bearish revaluation. Current analyst forecasts suggest a significant decline in earnings per share (EPS), with a projected fall of 74.61%, dropping from last year’s EPS of $1.93 to an estimated $0.49 this year.

This expected downturn may stem from several factors:

• Heavy investment spending in high-cost areas that do not provide immediate returns.
• Weak returns on recent projects, reducing total earnings.
• Slowing growth in China’s softer economy, alongside intensifying competition.

It is also important to note that the EPS forecast is based on only two analyst estimates, far fewer than the typical seven or eight. This makes the consensus less reliable and potentially more volatile.

Technical Analysis: Signs of a Potential Reversal

From a technical perspective, Alibaba’s share price may be gearing up for a bullish reversal. Key indicators supporting this include:

• A sharp rebound from the lower Bollinger Band, indicating potential upward momentum.
• A bounce from a Fibonacci support level at $148.46.
• An RSI reading of 36, suggesting the stock has been oversold.
• The MACD line nearing a crossover of the signal line on the daily chart, which typically signals strengthening bullish momentum.

Together, these indicators hint that Alibaba may be positioned for a short-term price recovery—pending earnings confirmation.

Fundamental Analysis: Attractive Valuation and Strong Price Targets

Fundamentally, Alibaba appears to offer good value. The company currently trades on a P/E ratio of 18.74, with a forward P/E of 16.85, indicating improving valuation as earnings stabilise.

This valuation supports price targets of:

• $177.68 (an 11.11% potential upside)
• $168.24 (a 5.20% potential upside)

Additionally, broader analyst expectations point to an average target of $198.21, representing a 29.61% upside, further reinforcing the view that Alibaba may be undervalued with room for long-term growth.

Outlook for Traders and Investors

Alibaba presents a mixed outlook heading into earnings.

• Long-term investors may find the stock appealing due to its solid fundamentals, improving valuation, and strong analyst ratings.
• Short-term traders, however, may prefer to wait for confirmation following the earnings release to avoid potential downside from the weak EPS forecast.

Overall, Alibaba could be primed for a bullish rally, but caution is warranted until the earnings report provides clearer direction.