Morgan Stanley has lifted its target price for Zoomlion (01157) from HK$5.1 to HK$5.2 while maintaining an "in line with the market" rating. The adjustment follows upward revisions to the company's 2025 and 2026 sales forecasts by 1% each, reflecting anticipated growth in earthmoving machinery and concrete equipment sales driven by China's construction machinery upcycle.

However, the investment bank simultaneously reduced sales projections for Zoomlion's aerial work platform segment. Margins are expected to improve slightly, with gross margin forecasts upgraded by 0.4, 0.3, and 0.3 percentage points across respective periods. Consequently, Morgan Stanley increased its earnings per share estimates by 4%, 2%, and 1%.

Despite these positive adjustments, analysts caution that Zoomlion faces significant challenges. China's ongoing economic recovery remains fragile and uneven, while global economic uncertainties and tariff policies persist. Intensifying competition in emerging markets may further pressure sales growth. The modest target price revision reflects these counterbalancing factors amid the broader industry recovery narrative.