Citigroup raises VTECH HOLDINGS target price to 76 yuan, rating "Buy"

Citi published a report indicating that VTECH HOLDINGS (00303.HK) is expected to see a year-on-year decline of 9% and 14.5% in revenue and net profit for the mid-term results of the fiscal year 2026, reaching USD 991 million and USD 74.7 million, respectively, slightly below the bank's expectations. As a result, it has lowered its earnings forecast for the fiscal years 2026 to 2027 by 1% to 2%, while maintaining its forecast for the fiscal year 2028.

However, the bank noted that the guidance provided by VTECH HOLDINGS' management for the fiscal year 2026 is generally in line with expectations. Therefore, it has raised the target price from HKD 62 to HKD 76, maintaining a "Buy" rating, and has increased the price-to-earnings ratio forecast for the fiscal year 2027 to 15 times to reflect a more optimistic gross margin expansion trend. If there is a decline in stock price due to slightly disappointing performance, the bank views it as a buying opportunity