Institutional Research

Management's European investor meetings reinforced Deutsche Bank's view that ServiceNow can capture enterprise AI spending while sustaining gross margins above 80%. The bank reiterates Buy and lifts its target price from $135 to $155, primarily reflecting a higher software-sector multiple.

• Target price raised to $155 from $135; Buy reiterated.
• AI packaging offers Foundation, Advanced and Prime entry points, with reported 20–30% uplifts for Foundation and Advanced.
• Management indicated AI consumption could generate roughly 4.5–5x the ACV associated with the relevant seat-based productivity opportunity.
• Security and risk is a $2bn+ business, supported by recent acquisitions.
• Management expects AI adoption not to push gross margin below 80%.

The report finds that merchants and consumers retain stronger economic and convenience incentives to use digital payments despite MDR. Payment revenues should remain resilient, although cash adoption by smaller merchants could weaken merchant-lending and other data-driven adjacent businesses.

• Annual ATM transactions fell from about 10bn in FY19 to about 5.3bn in FY26.
• For a representative merchant, INR 400 monthly MDR savings fall to INR 275 after lost deposit interest, while loss of transaction-linked credit could add about INR 667 in monthly borrowing cost.
• For a representative consumer, the maximum INR 80 monthly MDR saving falls to about INR 5 after foregone interest and additional ATM costs.
• Large merchants and online merchants account for much of payment value and are unlikely to revert to cash.

JPMorgan sees China’s 15th Five-Year healthcare plan as a constructive medium-term policy signal for innovation-led biopharma, CXO/CDMO, AI drug discovery and high-end medtech. The plan sets measurable targets for FIC innovation, R&D intensity, approvals and commercial scale.

• China-origin FIC drugs are targeted to comprise at least 25% of global innovative drugs by 2030.
• The innovative-drug industry is targeted to grow at no less than 20% annually.
• The plan extends AI applications from discovery and clinical development to manufacturing, quality control, distribution and regulation.
• JPMorgan reiterates WuXi Bio, WuXi AppTec, Innovent and Kelun Biotech as top picks.

The report expects new edge-AI applications and product commercialization to drive a 26% revenue CAGR and 65% net-profit CAGR in 2026-28F. Nomura sets a CNY39.30 target price, implying 31.3% upside from the 17 September 2026 closing price.

• 1H26 revenue rose 41.23% year-on-year to CNY1,888mn and attributable net profit rose 204.17% to CNY490mn.
• Robotics, AI glasses, industrial control and smart cockpits are identified as the main new-product growth vectors.
• Nomura forecasts 2026-28F revenue of CNY3,774mn, CNY4,724mn and CNY5,693mn.
• The CNY39.30 target is based on 45x 2026F P/E versus a peer average of 38x.
• Margin is expected to normalize after the 1H26 pricing uplift, partly cushioned by a better product mix and operating leverage.

Barclays forecasts about 475,000 3Q26 deliveries versus consensus of about 466,000, with FSD demand in North America and China-built exports supporting volume. It expects automotive margins to be broadly flat to slightly lower sequentially, while retaining an Equal Weight rating and USD 370 target price.

• Barclays forecasts approximately 475,000 deliveries, down 4% year on year but above approximately 466,000 consensus.
• FSD penetration exceeded 55% of North American deliveries in 2Q and is expected to remain a demand and margin support in 3Q.
• Shanghai exports may represent at least 20% of Tesla’s global 2026 volume and support demand outside China.
• Automotive margin is expected to be flat to slightly down from 16.3% in 2Q, pressured by incentives, regional mix and raw-material costs.
• Energy Storage deployments are forecast at approximately 15.6 GWh, up approximately 25% year on year.

BofA expects only 1% constant-FX growth in Chinese luxury demand in 2027 and forecasts 4% global luxury growth, reflecting muted consumer confidence, weaker jewellery and watch trends, and fiscal pressure on high-net-worth consumers.

• Sector revenue growth is forecast to slow to about 4% constant FX in 3Q26, a 270bp deceleration from 2Q.
• BofA cut sector revenue estimates by about 1% and EBIT/EPS estimates by 2-3% for 2027-28.
• Chinese consumers account for 29% of sector revenue, making weak China demand material for the global sector.
• Hard luxury is relatively resilient, but Mainland China jewellery sales fell 14% year-on-year in 3Q26TD.
• Hong Kong continues to capture Chinese offshore spend, supported by tourism, FX and high-net-worth consumption.

Morgan Stanley maintains an In-Line industry view for late 2026 through 2027. The report highlights durable DX, cloud, AI and modernization demand, while differentiating companies by execution, margins, valuations and company-specific risks.

• The industry view is In-Line despite solid demand and recent sector underperformance.
• Morgan Stanley expects share-price recovery in line with profit growth.
• Preferred rated names include NRI, NEC, Fujitsu, Otsuka and OBIC Business Consultants.
• AI adoption is presented as a source of productivity, higher-value services, recurring revenue and new product demand.
• Company catalysts center on quarterly revenue, operating profit, margins, orders, ARR, client additions, pricing and AI monetization.

JPMorgan’s high-frequency trackers show export momentum strengthening into September and government bond issuance catching up. The report nevertheless finds soft auto demand, persistent property-sector adjustment and uneven industrial activity.

• Departing non-tanker ship tonnage rose 5.8% year on year in August and 16.1% month to date in September.
• September government bond issuance was RMB1.56tn month to date and is expected to approach RMB2tn for the month.
• Passenger-car retail sales fell 19% year on year during September 1–6, while NEV sales declined 3%.
• New-home sales in 30 major cities remained down 5.4% year on year in September month to date, while secondary-home sales rose 18.2%.
• Rising energy and petrochemical prices contrast with a wider drag from agricultural food prices on headline CPI.

The report forecasts real GDP growth of 3.8% in 2026 and 3.3% in 2027 as AI-related technology exports, profits and capex accelerate. The boom strengthens fiscal and external balances, while raising upside risk to the Bank of Korea's terminal policy rate.

• Real GDP growth is forecast to rise from 1.1% in 2025 to 3.8% in 2026 and 3.3% in 2027.
• Real exports are expected to grow about 11% in 2026, led by technology volumes and prices.
• JPMorgan targets a 3.75% terminal policy rate by 2Q27, with upside risk.
• The current-account surplus is forecast at US$435 billion in 2026 and US$457 billion in 2027.
• Construction remains a drag even as consumption and equipment investment recover.

Management expects loan growth of about 17% through 2026-27, supported by customer upgrading and market-share gains. Goldman Sachs sees a more balanced earnings backdrop as NIM compression moderates, asset quality improves and dividend returns rise.

• Management expects approximately 17% loan growth in 2026-27.
• NIM has declined from above 1.8% one to two years ago to about 1.7%, but further compression is expected to moderate.
• Corporate NPL ratios remain below 0.3%, while consumer-loan asset quality improved in 1H26.
• Full-year DPS of approximately Rmb0.13 per share appears achievable; management described a dividend yield above 4% as a longer-term objective.
• Goldman Sachs retains a Rmb42.57 12-month target price, implying 23.1% upside from Rmb34.59.