Pacific Crest initiated coverage of Alibaba with an overweight rating, saying investors are underestimating the potential of the company’s AliCloud cloud computing business.
“AliCloud could be a significant growth and profit driver given Alibaba’s lead in the nascent and fast-growing cloud computing market,” analyst Hans Chung wrote in a note to clients Wednesday. “We see strong operating leverage potential ahead given AliCloud’s increasing economies of scale, while AliCloud’s operating margin outlook seems to be underestimated by the Street.”
