[ET Net News Agency, 21 May 2020] Morgan Stanley raised its target price for Lenovo
Group (00992) to HK$4.6 from HK$4.25 and maintained its "equal-weight" rating.
The research house expects June quarter revenue to see sequential growth, especially
since supply disruption was a headwind on Lenovo's top-line during the March quarter;
so all segments are expected to recover sequentially in 2Q - but nothing stands out.
On a y/y basis, Morgan thinks the overall June quarter revenue will still be slightly
down, but this is mainly dragged by dampened mobile demand. By segment, it expects
Lenovo's PC business (PCSD) revenue to be slightly up, supported by work from home and
e-learning demand, with Chromebooks expected to see material growth on a QoQ and YoY
basis. It expects its server business (DCG) to recover to flattish.
However, Morgan expects Lenovo's mobile business (MBG) to still see a significant
double-digit decline as its biggest mobile markets are still under lock-down for most of
2Q (North America/LatAm).
Morgan raised its 2021 and 2022 pre-tax earnings estimates by 5% each; however, its net
income estimates fell by 3% each, respectively, due to minority interest adjustments. (KL)