Alibaba Group Holding Limited (BABA) currently holds an Average Brokerage Recommendation (ABR) of 1.24, indicating a consensus between Strong Buy and Buy from 17 brokerage firms. Of these, 15 recommendations, or 88.2%, are classified as Strong Buy. This data was gathered in October 2023 and follows a 5.2% increase in the Zacks Consensus Estimate for Alibaba’s earnings per share (EPS) to $9.52 over the past month, reflecting analysts’ growing optimism about the company’s earnings prospects.
Despite the optimistic ABR, the effectiveness of brokerage recommendations has been questioned. Research shows that analysts often demonstrate a bias in their ratings due to the vested interests of their employing firms, leading to an overrepresentation of favorable ratings. In contrast, the Zacks Rank, a different evaluation model based on earnings estimate revisions, assigns Alibaba a Zacks Rank #1 (Strong Buy), which may provide a more reliable indication of the stock’s potential performance.
