Is Alibaba Health Information Technology Limited (HKG:241) Potentially Undervalued?

Alibaba Health Information Technology Limited (HKG:241), might not be a large cap stock, but it saw significant share price movement during recent months on the SEHK, rising to highs of HK$6.38 and falling to the lows of HK$4.63. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Alibaba Health Information Technology's current trading price of HK$4.80 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Alibaba Health Information Technology’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

See our latest analysis for Alibaba Health Information Technology

Is Alibaba Health Information Technology Still Cheap?

According to my valuation model, the stock is currently overvalued by about 34%, trading at HK$4.80 compared to my intrinsic value of HK$3.57. This means that the opportunity to buy Alibaba Health Information Technology at a good price has disappeared! If you like the stock, you may want to keep an eye out for a potential price decline in the future. Given that Alibaba Health Information Technology’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.

What does the future of Alibaba Health Information Technology look like?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. Alibaba Health Information Technology's earnings over the next few years are expected to double, indicating a very optimistic future ahead. This should lead to stronger cash flows, feeding into a higher share value.

What This Means For You

Are you a shareholder? 241’s optimistic future growth appears to have been factored into the current share price, with shares trading above its fair value. At this current price, shareholders may be asking a different question – should I sell? If you believe 241 should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping tabs on 241 for some time, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the positive outlook is encouraging for 241, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. In terms of investment risks, we've identified 1 warning sign with Alibaba Health Information Technology, and understanding it should be part of your investment process.

If you are no longer interested in Alibaba Health Information Technology, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.