Key Takeaways:
UBS slashed its price target on ZTE Corp. (00763.HK) to HKD24.5 from HKD37.7 after the telecommunications equipment maker’s annual profits for 2025 fell short of estimates.
In a research report, the bank maintained its “Neutral” rating on the stock, citing weak customer demand as the primary driver for lowering its future revenue and profit forecasts.
The downgrade followed ZTE’s latest earnings release, which showed a 10.4 percent year-over-year revenue increase to RMB133.9 billion. However, gross profit declined 11.9 percent to RMB40.5 billion and net profit landed at RMB5.6 billion, both missing market expectations. In response, UBS trimmed its 2026 to 2028 net profit forecasts by a range of 18 to 34 percent.
The significant reduction in the price target reflects concerns about ZTE's core business segments. UBS lowered its operator revenue forecasts for 2026-2028 by 8 to 9 percent and cut its consumer revenue estimates by 7 to 10 percent for the same period.
The move by UBS highlights potential headwinds for ZTE and the broader telecom equipment sector amid a challenging demand environment. Investors will be watching the company's next quarterly results for signs of stabilization in customer spending and margin recovery.
This article is for informational purposes only and does not constitute investment advice.
