LENOVO GROUP (00992) saw its shares climb close to 7% during the morning trading session. At the time of writing, the stock was up 6.86%, trading at HK$22.74 with a turnover of HK$1.042 billion.

A recent report from Nomura Securities maintained its Buy rating on LENOVO GROUP (00992.HK). The firm significantly raised its target price for the stock from HK$16 to HK$35, based on a valuation of 20 times its forecasted earnings per share for the 2027 fiscal year. This new target implies a potential upside of approximately 46%.

In its previous report on LENOVO in May, Nomura had already highlighted that the momentum in the company's general server business could far exceed expectations. Although LENOVO's share price has risen over 100% since May, Nomura believes this outperformance may continue. The firm's view is based on three key factors.

First, the market has not yet fully priced in the potential of LENOVO's server business. Second, Nomura's profit forecasts for the 2027/28 fiscal year are now about 10% higher than the market consensus. Third, LENOVO is currently undergoing a re-rating process. Nomura points out that the company's main peer, Dell (DELL.N), is trading at 30 times its one-year forward price-to-earnings ratio, which the firm believes creates room for a similar revaluation of LENOVO. Consequently, Nomura has raised its profit forecast for LENOVO GROUP for the 2027/28 fiscal year by 12%.