Saturday, August 18, 2018

Two Encouraging, But Not Convincing, Quarters From Lenovo

Once again Lenovo (OTCPK:LNVGY) (992.HK) has delivered a better-than-expected set of quarterly financial results and once again many sell-side analysts are reacting with “yeah, well … I still don’t believe it”. That skepticism isn’t completely unfair, as Lenovo has struggled for some time now to translate its strategic and R&D decisions into real financial upside and quite a bit of the recent outperformance has been driven by cost reductions.

I remain in the “skeptical optimist” camp with Lenovo, and I continue to hold a relatively small position, as I believe the company still has leverageable brand value in PCs, not to mention an efficient product development and manufacturing system, and long-term upside in its Data Center Group business. I’m still looking for roughly 2% long-term revenue growth, sub-2% FCF margins, and high single-digit FCF growth as the company stabilizes the Mobile group and drives better results from its PC business.

Read more here:
Two Encouraging, But Not Convincing, Quarters From Lenovo

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