On June 25, Lenovo Group rose 5.24% in regular trading, reaching HK$24.04 per share, with turnover of HK$221 million. The rally was primarily driven by Bank of America Securities significantly raising its target price and a technical rebound following consecutive sessions of decline.

On the news front, Bank of America Securities recently raised Lenovo Group's target price dramatically from HK$9.9 to HK$26.5, corresponding to a 16x FY27E P/E multiple. The bank simultaneously lifted its FY27-28 earnings forecasts by 70% to 82%, citing strong server profit expansion. The report highlighted that Lenovo's Infrastructure Solutions Group (ISG) has achieved profitability with an operating margin reaching a record 3.6%, supported by rising CPU server and AI server mix, making the current profit recovery more sustainable than prior cycles.

Lenovo had previously retreated over two consecutive sessions following its announcement of a US$2 billion zero-coupon convertible bond issuance, which raised dilution concerns of approximately 3.33% of equity if fully converted. The company plans to repurchase shares to offset dilution effects. With the technical oversold condition now being unwound, buying momentum has resumed.

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