Kingsoft Cloud upgraded to Buy from Neutral at UBS

UBS upgraded Kingsoft Cloud (KC) to Buy from Neutral with a price target of $12.50, up from $4.20. The company’s “solid” Q3 beat has boosted expectations for Kingsoft’s continued revenue and margin recovery, backed by artificial intelligence and the company’s ecosystem support, the analyst tells investors in a research note. With “surging” cloud usage, UBS estimates Kingsoft Corp. and Xiaomi’s revenue contribution to Kingsoft Cloud to exceed 40% by 2027 from 20% in 2024, driving 13% annual revenue growth. Despite an over 100% price rally year-to-date, Kingsoft Cloud shares are still trading at a valuation discount versus China independent cloud peers, which underestimates the company’s potential opportunities, contends the firm.