Barclays Jiong Shao: Alibaba shares could climb by 67%

The Chinese government cracked down on Alibaba Group Holdings Ltd (NYSE: BABA) this year, resulting in a massive hit to the stock, with shares still down about 40% from their year-to-date high. But Barclays says now is the time to buy BABA as the stock is set to recover completely.

Jiong Shao initiates Alibaba with an ‘overweight’ rating

In a note on Wednesday, Barclays’ Jiong Shao assumed coverage of Alibaba with an “overweight” rating and a price target of $275 that represents a 67% upside from here.

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The bullish call is based on the idea that China is the 2^nd largest economy in the world that makes its tech stocks simply “too important to be ignored”. Shao is convinced that Beijing wants to make its tech giants “stronger, not weaker’.

He is, therefore, also positive on a bunch of other Chinese stocks, including Baidu, Pinduoduo, and Sea Ltd.

Brenda Vingiello partially agrees with the bullish call

On CNBC’s “Halftime Report”, Sand Hill Global Advisors’ Brenda Vingiello partially agreed with the bullish call with a caution that investors must size their position in the Chinese tech stocks appropriately.  

The Chinese government is still very committed to supporting its private companies and sees that as a major growth driver for their economy going forward. In this world where valuations are extended for a lot of fast-growing tech companies, it’s an area that does present some opportunity.

Vingiello agrees that a position in these stocks could still present some risks but having some exposure to the Chinese tech sector makes “a lot of sense” to her.

On the contrary, however, Stephen Weiss starkly disagrees with Barclays’ bullish call as he sees the risk much higher than the potential reward.