Lenovo Continues To Execute, But Also Continues To Suffer From Macro Headwinds

I noted in my last article on Lenovo (OTCPK:LNVGY) that the company’s lack of meaningful internal drivers was an impediment to building any real share price momentum and/or shrinking the valuation gap. Moreover, in the absence of meaningful internal drivers, Lenovo is subject to the vagaries of transient macro challenges, the latest being the increasingly global Covid-19 outbreak.

The ADRs are pretty much flat relative to that last article, even though the company delivered yet another better-than-expected quarter, despite a number of macro challenges including the ongoing U.S.-China trade war, supply/component shortages, and the aforementioned outbreak. Although the shares look undervalued on assumptions of low single-digit revenue growth, low-single-digit operating margins, and only minimal improvement in free cash flow margins, it will likely take real improvement in the data center or mobile business to meaningfully shrink that valuation gap.

Read the full article here:
Lenovo Continues To Execute, But Also Continues To Suffer From Macro Headwinds