What happens to stocks if AI loses momentum?
Investing.com - Goldman Sachs upgraded Fujimi Inc (5384:JP) from sell to neutral on Tuesday, raising its price target to JPY2,290.00 from JPY2,230.00.
The upgrade comes after Fujimi shares have underperformed the market significantly, falling approximately 38% since Goldman Sachs downgraded the stock to sell on May 14, 2024, compared to a 2% rise for TOPIX over the same period.
Goldman Sachs attributes the stock’s decline to a correction in its previously rich valuation amid weaker-than-expected topline growth, primarily due to declining market share in China for CMP products and a relatively low proportion of sales for HBM applications in memory.
The stock is currently trading slightly below its 10-year average valuation at a FY3/26E P/E of approximately 14X, which Goldman Sachs considers broadly fair given the company’s outlook.
Large-scale investments will likely limit Fujimi’s operating profit growth to a FY3/25-FY3/28 CAGR of around 4%, down from the past five-year average growth rate of 14%, according to the investment bank.
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