Bank of America Securities: Lowering Alibaba Health's (00241) Target Price to HK$4.2 to Reiterate “Buy” Rating

The Zhitong Finance App learned that Bank of America Securities released a research report stating that the target price for Ali Health (00241) was lowered from HK$5.1 to HK$4.2, reaffirming the “buy” rating. The bank lowered the company's 2027 revenue and adjusted net profit forecast by 4%, respectively, to a year-on-year increase of 9% to RMB 37.4 billion and a year-on-year decrease of 10% to RMB 2.1 billion, mainly affected by reduced platform subsidies and weak sales in non-pharmaceutical categories.

The bank pointed out that although the company recently experienced personnel changes and the CEO changed, it is expected that medical AI and omnichannel drug retail will still be its primary strategy, which can enhance long-term competitiveness and growth. In terms of medical AI, the company strives to develop “hydrogen ions”, a professional AI assistant for doctors, and explore monetization methods; at the same time, it is expected that the company will reinvest profits in omni-channel drug retail, connect O2O and B2C transaction flows, and create collaboration in contract execution time and product selection.

The bank estimates that Alibaba Health's revenue for the first half of fiscal year 2027 was RMB 18.1 billion, up 8% year on year; adjusted net profit was RMB 1.16 billion, down 15% year on year. The bank lowered the company's target price due to a reduction in profit forecasts and a slowdown in the average compound annual growth rate of free cash flow.