"Performance" JP Morgan downgraded Lenovo Group's rating to "Neutral" and cut the target price to 9.5 yuan

AASTOCKS
2025.11.21 03:20

JP Morgan's research report pointed out that Lenovo Group (00992.HK) had solid performance for the second quarter of the fiscal year 2026 ending in September, benefiting from the demand for Windows 10 upgrades, increased market share, and resilient spending from cloud service providers, with both personal computer and server business revenues achieving double-digit year-on-year growth. The company is optimistic about its prospects for 2026, expecting growth in personal computers, small and medium-sized enterprises (ESMB), and cloud service provider businesses.

However, JP Morgan is concerned about the recent sharp rise in memory prices and potential component shortages in the next six months, but believes that Lenovo, with its scale advantages, may be in a better position than its peers amid industry headwinds. Nonetheless, it expects that earnings will still face downward pressure and valuation adjustments in the coming quarters.

Based on the above factors, JP Morgan has lowered its earnings forecasts for Lenovo for the fiscal years 2026 and 2027 by 9% and 22%, respectively, and downgraded its rating from "Overweight" to "Neutral," with the target price reduced from HKD 13 to HKD 9.5

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