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Investing.com - BofA Securities upgraded Kingsoft Cloud (NASDAQ:KC) from Neutral to Buy and raised its price target to $20.40 from $12.90 on Monday. According to InvestingPro data, the company, currently valued at $3.9 billion, has seen its stock surge over 31% year-to-date, making it a prominent player in the IT Services industry.
The upgrade follows Kingsoft Cloud’s second-quarter 2025 results released in late August, which exceeded revenue consensus by 3%, according to BofA Securities analyst Daley Li. InvestingPro data shows the company’s revenue growth at 20.3% year-over-year, with analysts maintaining a bullish consensus recommendation of 1.58 (where 1 is Strong Buy).
BofA Securities cited three key factors for the upgrade: higher revenue growth visibility driven by artificial intelligence and incremental demand from the Xiaomi ecosystem; improving business quality as AI-driven public cloud business has higher gross profit margins (high-teens percentage) compared to non-AI public cloud business (approximately 10%); and improving profitability due to operating leverage and stringent cost control.
The investment bank expects Kingsoft Cloud to reach non-GAAP operating-level breakeven in fiscal year 2027 and has raised its FY25-27E revenue estimates by 6-8%, placing its forecast 2-5% higher than consensus estimates.
BofA Securities adjusted its price objective based on a higher valuation multiple of 3x 12-month forward price-to-sales, up from its previous 2x multiple, citing a better growth outlook for the company. Based on InvestingPro’s Fair Value analysis, the stock appears to be trading near its fair value, with analyst price targets ranging from $13.00 to $26.37.
In other recent news, Kingsoft Cloud Holdings Ltd reported its second-quarter 2025 earnings, significantly surpassing analysts’ expectations. The company posted an EPS of -0.11, which was a notable improvement over the forecasted -0.97, resulting in an 88.66% surprise. Additionally, Kingsoft Cloud’s revenue exceeded both consensus estimates and Jefferies’ projections, though the adjusted EBITDA was affected by one-time losses. In response to these results, Jefferies raised its price target for Kingsoft Cloud from $16.00 to $17.00, while maintaining a Buy rating on the stock. These developments highlight the company’s performance amid the growing demand for AI services. Despite the positive earnings report, investor sentiment appeared cautious due to broader market challenges. The stock experienced a minor premarket decline, trading at 13.59.
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