On Monday, Morgan Stanley (NYSE:MS) reiterated its Overweight rating on Fujifilm Holdings Corp. (TYO:4901:JP) (OTC: FUJIY), with a price target of JPY4,200.00. The firm’s analysis suggests that Fujifilm’s growth narrative, driven by its healthcare-related earnings, remains solid. However, it anticipates a temporary deceleration in profit growth for the fiscal year ending March 2026 (F3/26) due to a year-over-year decline in healthcare earnings.
The anticipated slowdown is attributed to lower utilization rates in the bio Contract Development and Manufacturing Organization (CDMO) sector, as the company undergoes regular maintenance of existing facilities. Additionally, depreciation costs are expected to increase with new facilities becoming operational in Denmark and the United States. These factors are not considered intrinsic to the business but are instead seen as temporary influences.
Morgan Stanley expects Fujifilm’s stock might face downward pressure in the near term as consensus earnings estimates adjust. However, the firm predicts that once Fujifilm provides guidance for F3/26, the uncertainty around earnings will be resolved. This clarity is anticipated to help alleviate concerns among investors.
The investment firm also notes that Fujifilm’s capital expenditures are likely to peak in F3/25, having expanded mainly due to investments in bio CDMO operations. From F3/26 onward, cash flow is expected to improve, providing Fujifilm with more opportunities to return profits to shareholders. This potential for increased shareholder returns is seen as a positive factor that could support the stock price in the future.
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