In a report released today, analysts at Stifel laid out their bullish take on Alibaba Group Holding Ltd BABA 0.6%. Stifel upgraded Alibaba to Buy and added the stock to its Stifel Select List.

Regulatory Risk Priced In

Alibaba has been plagued by allegations of regulatory misconduct in recent months. The original complaint from an SAIC regulator alleged that a significant number of Taobao’s products were counterfeit. According to the report, Alibaba has cooperated with authorities and defended its policies throughout the process.

Analysts believe that the headline risk associated with the issue is now in the past. “We doubt that neither the amount of inauthentic merchandise on Alibaba nor the Chinese government’s focus on the issue has changed since the report,” analysts add. Alibaba has pledged to crack down on counterfeit goods on its site.

Analysts believe the negative sentiment and continued risk from these issues has already been priced into the stock, which is down 19 percent year-to-date.

Thinking Long-Term

Analysts point to two investments Alibaba made that negatively impacted the company’s disappointing Q4 numbers. First, the company increased the relevancy of its search relative to ad spend. Second, Alibaba opened up more long-tail keywords. Analysts believe that these two investments will pay off for the company in the long-term, from both a revenue perspective and a user experience perspective.

Lockups And Valuation

Analysts mention the lockup expiration of about 437 million shares of Alibaba stock coming on March 18 as something for shareholders to watch in the short-term. However, Stifel analysts are bullish on Alibaba overall and have a $99 target for the stock.

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