Xiaomi stock (1810) gained more than 8% at the time of writing this article, one day before its quarterly report.
Xiaomi intends to announce its Q3 results tomorrow (Published here on November 24). Before the financial report, Xiaomi rose 5% in intraday trading, and then soared to a record high.
It is worth noting that Xiaomi has risen 23% since November, and the momentum is quite strong.
Although the stock price has risen gratifyingly, big banks have mixed feelings for Xiaomi. In the latest institutional ratings, many institutions still give Xiaomi “Neutral” and “Sell” ratings:
The following are some of the latest institutional price targets for Xiaomi stock
UBS: Upgrades forecast for smartphone shipments, but maintains Xiaomi’s target price of 23 Hong Kong dollars, rating “Neutral”
UBS issued a report that raised its forecast for Xiaomi’s smartphone shipments for the third quarter of this year, from 38 million to 43 million, and raised the company’s smartphone forecast for the next two years from 132 million and 160 million each. To 139 million and 165 million units each, taking into account the growth of Xiaomi’s Latin American business, the company will announce its third quarter results on the 24th. It is expected that Xiaomi’s revenue and net profit for the previous quarter will be RMB 76 billion and RMB 3.3 billion respectively. The market forecasts RMB 69 billion and RMB 3.3 billion respectively.
The bank lowered Xiaomi’s 2020-2022 earnings per share estimate by 4% to 5%. UBS maintains a “Neutral” rating for Xiaomi and a target price of HK$23, which is HK$6 lower than the current price, which is equivalent to a forecasted P/E ratio of 27 times in the coming year.
According to the findings of the UBS Evidence Laboratory, the bank reached three conclusions. Among Chinese consumers, Xiaomi’s ranking is being promoted to an “ideal/high-end brand” and ranked second, second only to Huawei. The proportion of Chinese consumers who regard Xiaomi as a “brand I stick to” has risen from 25% in March 2020 to 37% (the highest in history).
Finally, the number of respondents who regard Xiaomi as a “value for money” brand has dropped sharply. The bank believes that the above observations may be the result of Xiaomi’s “high-end” strategy for the transition of mid-to-high-end models and aggressive 5G product portfolio transition. The result, and to a lesser extent, implies that the company may benefit from Huawei’s situation.
Bank of America: Maintain “Buy” rating
Qualcomm has obtained a license from the United States to sell 4G mobile phone chips to Huawei. The bank believes that in view of the shrinking 4G market in China, the penetration rate of 5G smartphones in October has reached 67%, which is believed to have limited impact on Xiaomi.
Bank of America maintains Xiaomi’s “Buy” rating with a target price of HK$26.
China Merchants Securities: Raise Xiaomi’s target price by 27%, maintain “Buy” rating
China Merchants Securities International issued a report, raising the target price of Xiaomi by 27%, from HKD$22 to HKD$28, maintaining a “buy” rating.
According to the report, Xiaomi’s third-quarter performance is expected to meet market expectations. Due to strong smartphone sales, the company’s revenue is expected to reach 70 billion yuan, but the Internet of Things and Internet services are lagging behind forecasts, so the gross profit margin forecast is lowered to 14.4%. And slightly raised the adjusted net profit forecast for the third quarter to 3.6 billion yuan.
The report also pointed out that the forecast for Xiaomi’s Internet of Things and Internet services has been lowered. Game revenue may return to pre-epidemic levels, and Internet finance revenue may also decline. In the long run, it is optimistic about the establishment of Internet service businesses. The report also pointed out that Xiaomi’s share price has soared by more than 60% in three months, thanks to its strong smartphone market share growth and rising technology stocks. Due to the rising market expectations, it reminds that there may be a stock price correction near the third quarter results.