Lenovo shares experienced a sharp decline in Hong Kong as doubts linger over the PC giant’s short-term growth prospects, despite posting third-quarter results that exceeded expectations.
Financial Overview
The company reported a 23% decrease in third-quarter net profit to US$337 million, attributed to a high base of comparison. However, revenue saw a 3% year-on-year increase to US$15.7 billion, marking the first growth in two years.
Analyst Insights
Analysts at Citi, Carrie Liu, and Michael Hung expressed a cautious outlook for Lenovo in the near term, highlighting weaknesses in the servers business and a potential delay in PC purchases by enterprise customers in the first half of the year.
Citi lowered its stock target price to HK$10.50 but maintained a buy rating, emphasizing confidence in Lenovo’s long-term trajectory.
Expert Analysis
Senior Credit Analyst Trung Nguyen from Lucror Analytics noted significant improvement in Lenovo’s performance compared to the previous quarter. Nguyen highlighted the company’s strong balance sheet, reliable liquidity, and effective working capital management as factors that could mitigate challenges in the PC segment.
