Although I flagged overly negative sentiment as a risk for Lenovo (OTCPK:LNVGY) shares in my prior update, it's still frustrating to see, and these shares have continued to lag HP (NYSE:HPQ) and Dell (DELL) since my last update (and over the past year), as investors and analysts remain more fixated on the prospect of ongoing investments to build the data center business than on the successes in the PC business.
Older investors may be familiar with the expression of "don't fight the tape", and that's not bad advice to a point. It seems as though Lenovo will face sentiment headwinds until and unless the DCG turns a profit, but I do believe the company's investments here will pay off eventually. I'm willing to be sort-of patient about this (I will still complain…), and I continue to see Lenovo as meaningfully undervalued as assumptions of low single-digit revenue and FCF growth still drive a double-digit annualized potential return.
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Lenovo Gets No Love For Another Beat, With Investors Focused On Ongoing DCG Investments
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