JPMorgan stated that ZTE's third-quarter revenue and profit were 16% and 9% below market consensus, respectively. The contraction of the domestic telecommunications business network led to a 4% decline in quarterly revenue. The stable performance of the company's domestic enterprise and consumers, as well as the partial offset of overseas business, mitigated the impact. However, the increasing contribution of low-margin revenue dragged down the group's gross margin performance year-on-year, and net income also declined by 8% year-on-year.

The bank also pointed out that the market consensus for ZTE's full-year revenue and net income is 129.4 billion yuan and 9.8 billion yuan, respectively. This implies that fourth-quarter revenue and net income need to grow by 13% and 26% year-on-year, respectively, which is significantly higher compared to the less than 1% growth in the first three quarters. Along with the high base effect from last year, the bank believes that the market's fourth-quarter performance expectations for ZTE are overly optimistic. It is expected that market expectations will be significantly adjusted downwards after the performance announcement, anticipating a negative market reaction in the stock price. The future outlook for the stock price will depend on the speed of macroeconomic recovery, as well as the capital expenditure of telecommunications companies in the fourth quarter and next year.

The bank currently maintains a 'Neutral' rating and a target price of HK$18.5 for ZTE.