Citigroup has released a research report revising its outlook for Kingsoft Corporation Limited (SEHK: 03888). The report notes the company's first-quarter revenue grew 3% year-on-year, though it declined 8% quarter-on-quarter, which aligned with expectations. Adjusted net profit saw a substantial year-on-year increase, reaching RMB 1.14 billion.

Looking forward, the bank anticipates a potential turning point for Kingsoft's gaming segment, possibly in the fourth quarter of this year or early 2027. In light of this forecast, Citigroup has adjusted its revenue projections for the fiscal years 2026 through 2028 downward by 2%, to RMB 10.2 billion, RMB 11.3 billion, and RMB 12.3 billion respectively. This revision accounts for an expected decline in the gaming business's performance over the next one to two quarters.

Concurrently, the firm has raised its adjusted net profit forecast for the current year by 27%, reflecting a greater share of profits from joint ventures recognized in the first quarter. However, adjusted earnings estimates for the following two years have been reduced by 14% and 2%, primarily due to a downward revision in the projected gross margin for the gaming business.

As a result of these updated assessments, Citigroup has lowered its target price for Kingsoft from HK$35 to HK$33. The investment bank continues to maintain a "Buy" rating on the stock.