Nomura Securities: Has upgraded Lenovo (00992) to a "buy" rating with a target price of 14 Hong Kong dollars.

Recently, well-known brokerage Nomura Securities released a research report stating that it has raised its rating on Lenovo (00992) to Buy, with a target price of 14 Hong Kong dollars, representing a 38% upside potential from the current stock price. In the research report, Nomura Securities pointed out that the reason for the rating upgrade is due to Lenovo's stock price being in a volatile adjustment phase over the past six months, making it a good buying opportunity. In addition, the potential resumption of shipments to Chinese customers for NVIDIA's H20 servers, the launch of RTX Pro in China at the end of the 2026 fiscal year, the expected increase in Lenovo's AI server business in China, strong demand for general servers from international customers, and growth in PC market share all provide support. Based on a 12 times price-to-earnings ratio on the estimated earnings per share of $0.15 for the 2026 fiscal year (previously based on a 12 times price-to-earnings ratio on the estimated earnings per share of $0.14 for the 2026 fiscal year), the stock is currently trading at a price-to-earnings ratio of 8.6 times the expected earnings per share for the 2026 fiscal year. Nomura also believes that due to strong demand for general servers and increased market share in the personal computer market, performance in the months of April to June may exceed expectations. This is mainly driven by leading customers (including large international enterprises and Chinese internet companies) shifting their capital expenditure from AI servers to general servers, leading to growth in server revenue. In terms of the PC business, Lenovo has taken away more market share from competitors such as Dell and HP in the US and EU markets, which will help boost overall sales and profitability in the months of April to June. Looking ahead to 2026, Nomura believes that Lenovo will be a beneficiary of the rising demand seen in Microsoft in recent quarters. The potential recovery of H20 server shipments is expected to bring in additional revenue in the December quarter. Additionally, although the upstream supply chain for PCs saw accelerated orders in the first half of 2025, the impact on the remaining PC shipment forecast for the rest of this year is limited, and Lenovo is expected to continue to increase market share.