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Investing.com - Goldman Sachs has upgraded HOYA Corporation (7741:JP) (OTC:HOCPF) from Neutral to Buy and raised its price target to JPY22,000.00 from JPY20,000.00, representing 22% upside potential.
The upgrade is primarily driven by strong demand for hard disk drives (HDDs), particularly in the nearline segment due to server investment growth. Goldman Sachs notes increasing adoption of Heat-Assisted Magnetic Recording (HAMR) models to meet greater HDD capacity needs, with HAMR glass substrates potentially expanding HOYA’s customer base beyond Seagate from 2026 onward.
Easing uncertainty over reciprocal tariffs on Thailand, Vietnam, and the Philippines—where HOYA manufactures eyeglass lenses with high U.S. sales exposure—also factored into the upgrade. The announcement of tariff rates effective from August has provided clarity, with Goldman Sachs expecting limited overall earnings impact despite potential volume effects from higher prices in the U.S. market.
Goldman Sachs also highlighted potential for larger share buybacks, noting that HOYA’s current cash position exceeds its six-month sales benchmark. The firm projects that fiscal year 2026 buybacks could surpass fiscal year 2025 levels, despite some investor concerns about the company’s 40% payout ratio under its progressive dividend policy.
The upgrade is based on a sum-of-the-parts valuation methodology, with the new price target reflecting Goldman Sachs’ bullish outlook on HOYA’s business fundamentals and capital return potential.
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