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Investing.com - Citi upgraded Amada Co Ltd (TYO:6113) stock rating to buy from neutral on Friday, while raising its price target to JPY2,000 from JPY1,400.
The Japanese machine tool manufacturer’s new price target represents a forward price-to-earnings ratio of approximately 14 times based on fiscal year 2027 estimates, according to the investment bank.
Citi cited several factors for the upgrade, including expectations that orders will bottom out and rebound, along with anticipated improvements in return on equity due to balance sheet reforms and benefits from the Via Mechanics acquisition.
The bank also highlighted the potential for Amada to raise its full-year guidance in the first half to reflect the impact of the Via Mechanics acquisition, as well as the possibility of additional share buybacks before the company releases its full-year results.
Citi’s target price increase was partially driven by rolling forward its base valuation year to fiscal year 2027 from fiscal year 2026, while also lifting its target price-to-book ratio to 0.9 times from 0.8 times.
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