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On Thursday, Citi issued a downgrade for Biprogy Inc (8056:JP), moving its rating from Neutral to Sell and adjusting the price target to JPY4,200 from JPY4,600. The adjustment follows the company's second-quarter results, which prompted a revision of forecasts due to a negative shift in the outlook for Biprogy's in-house SAP system installations, a key component of its medium-term plan.
The financial institution has revised its full-year 325E operating profit (OP) and earnings per share (EPS) projections for Biprogy to JPY36 billion and JPY251, respectively.
This is a decrease from the previous estimates of JPY37 billion for OP and JPY258 for EPS. The new figures are closely aligned with the company's guidance of JPY35.5 billion for OP and JPY244 for EPS, but fall below the consensus estimates of JPY37.2 billion for OP and JPY261 for EPS.
Additionally, Citi has updated its expectations for the company's medium-term EPS compound annual growth rate (CAGR), lowering it to +6% from the previous +7%. The analysis suggests that Biprogy may face challenges in meeting its medium-term targets and could experience profit growth that lags behind the sector average.
The revised price target of JPY4,200 represents a downward revision in response to these factors. The downgrade to Sell reflects Citi's outlook that Biprogy's stock performance may not fare well in the near future, based on the company's recent financial outcomes and projections.
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