Daiwa Research raised its target price for Lenovo Group (00992) to HK$5.4 from HK$5 and reiterated its "outperform" rating.
The research house said Lenovo's 1Q FY2021 results (ie, June quarter) beat expectations
as the business momentum improved across all segments. Daiwa remains positive on the 2Q FY2021 outlook, given the solid WFH (work from home) demand, on-going recovery in mobile revenue and resilient strength in the server business.
With upcoming launches of several new 5G phones (eg, Moto Edge+ and Moto 5 5G+), Daiwa also expects 20-25% QoQ revenue growth in 2Q FY2021. It expects a mid-single-digit QoQ decline on hyperscale clients' order adjustment. Daiwa raised its FY2021-22 EPS forecsts by 6-16% after factoring in our better-than-expected revenue/margin assumptions.
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