Citigroup: Raises ZTE Corporation's (00763) target price to HK$27.5 due to opportunities in AI development. Rating: "Buy"

Citibank issued a research report stating that it raised the target price of ZTE Corporation (00763) by 38.9%, from 19.8 Hong Kong dollars to 27.5 Hong Kong dollars, with a "buy" rating. Citibank introduced earnings forecasts for the company for 2027, and lowered earnings forecasts for 2025-2026 by 14-18%, considering the impact of weak telecommunications business, increased server revenue mix on profit margins, which is offset by strict cost control. Despite the softness in operator network business and the impact of increased server sales on short-term profit margins, the bank is optimistic about ZTE Corporation's business transformation from traditional telecommunications operators to infrastructure suppliers, with its non-telecom AI-related revenue mix continuously increasing. Therefore, the bank believes that the company is worth reconsidering its rating.