In "The Big Banks," Citigroup lowers the target price for Lenovo Group to 12 yuan and maintains the "Outperform" rating

Citi released a report stating that Lenovo Group (00992.HK) is expected to achieve a non-GAAP net profit of USD 512 million for the second quarter of the fiscal year ending September 2026, representing a year-on-year growth of 25%, which is 17.9% higher than market expectations, mainly benefiting from the stable gross margin performance of its personal computer business.

The company pointed out that compared to its peers, Lenovo has shown greater resilience to rising memory prices and, with its strong bargaining power with memory suppliers, should be able to maintain profitability. The bank expects Lenovo's gross margin for the fiscal year ending March 2026 to remain basically stable, while the gross margin for the fiscal year 2027 will depend on its ability to pass on cost pressures. The target price has been lowered from HKD 12.8 to HKD 12, maintaining an "outperform" rating.

The bank has raised its non-GAAP net profit forecast for Lenovo Group for the fiscal year 2026 by 7% to USD 1.7 billion to reflect the upward revision of the gross margin forecast for the personal computer business; however, it has lowered the non-GAAP net profit forecast for the fiscal year 2027 by 6% to USD 1.8 billion to reflect the pressure from memory prices