Shares of Alibaba Group may be down 11% from their peak closing high, but Pacific Crest Securities remains unmoved in its outperform rating and $127 price target. Analyst Cheng Cheng believes the market is underappreciating the potential contribution from Alibaba affiliate Ant Financial, which houses its PayPal rival mobile payments arm, Alipay. Cheng values Ant Financial, which is 33% owned by Alibaba, at around $70 billion, which would equate to roughly $23 billion in value to Alibaba. Alipay is the largest contributor to Ant Financial, valued at roughly $60 billion. Cheng said there is "significant optionality" that could drive those values even higher. While Alipay is already used as the primary payment platform on Alibaba e-commerce sites Taoboa and Tmall, Cheng said there is also an opportunity to grow into adjacent financial services markets, such as wealth management, payroll services and credit. Alibaba CEO Jack Ma has said he plans to take Alipay public, likely in its home market of China. Shares of Alibaba were up 1.1% to $107.19 in premarket trade. They have been on a downward trend since peaking at $119.15 on Nov. 10.
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