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Investing.com - HSBC initiated coverage on Shenzhen Zhaowei Machinery (SZ:003021) with a Hold rating and a price target of RMB114.00, according to a research note released Wednesday.
The stock has rallied 65% this year, significantly outperforming the CSI300 index which has gained just 9% year-to-date, suggesting current valuations have already priced in strong growth prospects.
HSBC notes that Zhaowei Machinery is trading at 92 times its projected 2026 earnings, reflecting high market expectations for both its existing business and potential opportunities in the humanoid robots sector.
The price target of RMB114.00 is based on a discounted cash flow analysis using a weighted average cost of capital of 10%, cost of equity of 10.4%, cost of debt of 5.0%, and perpetual growth rate of 2.5%.
HSBC identified several key factors that could impact the stock’s performance, including dexterous hands demand, intelligent auto upgrade pace, order and market growth rates, and competitive pressures in the machinery sector.
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