BofA Securities has released a research report lowering its target price for Ali Health (00241) to HK$4.2 from HK$5.1, while reiterating a "Buy" rating. The firm has trimmed its revenue and adjusted net profit forecasts for the company's fiscal 2027 by 4%, now projecting year-on-year growth of 9% to RMB 37.4 billion in revenue and a year-on-year decline of 10% to RMB 2.1 billion in adjusted net profit. This revision is primarily attributed to reduced platform subsidies and weaker sales in non-pharmaceutical categories.

The brokerage noted that despite recent executive changes, including the appointment of a new chief executive officer, medical AI and omnichannel pharmaceutical retail are expected to remain the company's top strategic priorities, which could bolster its long-term competitiveness and growth trajectory. On the medical AI front, the company is focused on developing "Hydrogen Ion," a professional AI assistant designed for physicians, and is exploring monetization avenues. Additionally, the firm anticipates that Ali Health will reinvest profits into omnichannel pharmaceutical retail, connecting O2O and B2C transaction flows to create synergies in delivery times and product selection.

BofA Securities projects that Ali Health's first-half fiscal 2027 revenue will reach RMB 18.1 billion, up 8% year-on-year, with adjusted net profit of RMB 1.16 billion, down 15% year-on-year. The target price reduction reflects lower earnings forecasts and an expected slowdown in the compound annual growth rate of free cash flow.