Morgan Stanley: Lenovo Group's Q3 Performance Misses Expectations, H1 Pull-In Demand Overdraft Leads to H2 Slowdown Weighing on Results

Deep News10-13

Morgan Stanley released a research report citing IDC data showing that Lenovo Group (0992.HK) shipped 14.9 million PC units in the third quarter of 2026, down 10% quarter-over-quarter and plunging 23% year-over-year.

Excluding workstation products, Lenovo's combined desktop and notebook shipments for the quarter totaled 14.4 million units, coming in 5% below the bank's own estimate and 7% below market consensus.

The report noted that the underperformance relative to Morgan Stanley's and market expectations stemmed from a demand slowdown in the second half of 2026, following stronger-than-expected demand in the first half of 2026 driven by early inventory stocking.

Given supply tightness triggered by the memory super-cycle and OEM pricing pressure, Morgan Stanley holds a cautious view on PC end-demand in the second half.

However, the bank believes that in the face of demand headwinds, OEMs such as Lenovo will still prioritize safeguarding profitability; at the same time, the decline in PC shipments is expected to be effectively offset by rising average selling prices, with a limited impact on Lenovo Group's overall revenue.

Within the OEM/ODM sector covered by Morgan Stanley, the bank is more bullish on Lenovo Group due to its higher proportion of commercial PCs, larger procurement scale, and improving profitability at its Infrastructure Solutions Group (ISG), which helps drive margin expansion despite pressure from component cost inflation.

On this basis, Morgan Stanley maintained its target price of HK$46 on Lenovo Group with an Overweight rating.

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