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On Tuesday, Bernstein SocGen Group signaled increased confidence in Kokusai Electric Corp (6525:JP), upgrading the company’s stock rating from Market Perform to Outperform and raising the price target from JPY2,690.00 to JPY2,920.00. The revision reflects a positive outlook on the company’s position in the NAND market and other factors contributing to its growth prospects.
The upgrade comes amid expectations of a robust recovery in NAND capital expenditure, with forecasts indicating a 43% increase this year followed by a 72% surge next year. As a leading NAND player in Japan, Kokusai Electric is well-positioned to benefit from this upturn. Bernstein analysts also anticipate more resilient capital expenditure in China than currently expected, which could particularly favor Japanese equipment companies in the memory sector.
Additionally, the long-term trend of atomic layer deposition (ALD) technology penetration is seen as a driving force for Kokusai Electric’s future growth. This technology is essential for advanced semiconductor manufacturing processes, and the company’s involvement in this area is expected to contribute positively to its performance.
The analysts also highlighted the company’s neutral impact from foreign exchange fluctuations and its appealing valuation. With a price-to-earnings ratio of 14 times, Kokusai Electric’s shares are considered undemanding. The new price target of JPY2,920.00 is based on a constant 16 times price-to-earnings ratio, which represents a 28% upside from the stock’s closing price as of April 21.
This upgrade reflects a broader optimism in Kokusai Electric’s market position and financial health, as the company navigates the dynamic semiconductor industry landscape. With the semiconductor sector being critical to a wide array of technologies, Kokusai Electric’s upgraded rating and price target underscore its potential for growth in the coming periods.
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