Benzinga | Dec 21, 2021 07:12AM EST

Read Why Atlantic Equities Downgraded Alibaba And Cut Price Target By 24.3%

* Atlantic Equities analyst James Cordwell downgraded Alibaba Group Holding Ltd (NYSE:BABA) to Neutral from Overweight with a price target of $140, down from $185. The new price target implies a 21.7% upside.

* While the stock is "inexpensive," the plans detailed at the company's recent investor event provide little confidence that Taobao and Tmall's performance will improve near term.

* Related Content: Read Why Goldman Sachs Is Bullish On Alibaba After Its 2021 Investor Day 2

* Further, management's commitment to "ongoing aggressive investment" has left the analyst less optimistic regarding renewed capital allocation discipline.

* While external capital raising for some divisions "could admittedly close some of the valuation disconnect" short of an AliCloud spin, such developments "would only be modest catalysts."

* Price Action: BABA shares traded higher by 1.64% at $116.89 in the premarket session on the last check Tuesday.