Alibaba priced its shares at $68 a piece Thursday, solidifying its stature as the biggest U.S. initial public offering (IPO) in history, and investors are likely to push the price higher when it opens for trading on Friday, analysts say.
"Going by Alibaba's IPO pricing of $68, there is likely to be plenty of upside on the stock on its trading debut," said Ryan Huang, market strategist at IG.
"The price suggests Alibaba will trade at around 29 times earnings, which will put it at a discount to some of its industry peers, compared to Amazon's forward price-to-earnings at 356, Tencent's at 31 and Baidu's at 32. This suggests Alibaba is focused on pulling off a success listing, in being careful not to overprice its IPO and turn off investors," he added.
The stock priced at the top of the revised $66-$68 range, well ahead of the initial $60-$66 range. At $68 a piece, the IPO will raise $21.8 billion when it debuts.The Chinese e-commerce giant plans to sell 320 million shares, and has the option to sell an additional 48 million.
Read MoreAlibaba prices IPO at $68 a share
"The pricing is very compelling. The company's recent financials were very impressive with daily active buyers around 280 million, profit of $2 billion and 43 percent operating margin," said Brad Gastwirth CEO of technology and healthcare investment firm ABR Investment Strategy. "I expect BABA to be a core holding for many large cap growth portfolios."
"I will not be surprised if the IPO price edges up to match expectations on the UK gray market currently over around $90," said IG's Huang referring to a service IG offers that allows customers to bet on Alibaba's value ahead of the IPO.
"Over the next few weeks and months, there's likely to be momentum to bid it up further as fund managers start to add Alibaba to their portfolios for the China e-commerce market exposure," said Huang, adding that this could lead to a sell-off in other internet related stocks (particularly Amazon) as capital is reallocated.
Shares of Softbank, Alibaba's largest shareholder, rose 1 percent in early Asian trading.