CICC cut Alibaba Health's target price to HK$4.5 and forecast that its pharmaceutical business would offset the decline in health food.
CICC cut Alibaba Health's target price from HK$6.5 to HK$4.5. Although it maintained its Outperform rating, the downward revision reflects volatility in the health food business.
Profit forecasts were also revised. Non-GAAP net profit estimates for FY2027 and FY2028 were cut by 6.6% and 5.8%, respectively, to RMB2.178 billion and RMB2.421 billion. The main factors behind the revisions were the impact of the health food category and the pace of investment in medical AI.
While the pharmaceuticals category is maintaining solid momentum, health food is expected to find recovery difficult amid regulatory headwinds. First-half revenue is expected to grow in the high single digits year on year, while net profit is projected to remain broadly flat.
CICC identified Alibaba Health's continued investment in medical AI as a key focus and viewed the announcement of Hydrogen Ion and its exclusive partnership with JAMA positively, while advising a cautious assessment of the impact of additional investment and future results.