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Investing.com - Morgan Stanley downgraded Hamamatsu Photonics KK (TYO:6965) stock rating from Equalweight to Underweight and slashed its price target to JPY1,300.00 from JPY1,750.00.
The investment bank reduced its operating profit forecasts for the Japanese photonics company to JPY18.0 billion for fiscal year September 2025, down from its previous estimate of JPY23.5 billion. Morgan Stanley also cut its projections for fiscal 2026 to JPY20.0 billion from JPY26.4 billion, and for fiscal 2027 to JPY24.9 billion from JPY32.2 billion.
Morgan Stanley expects Hamamatsu’s earnings to bottom out in the second half of fiscal 2025, with quarterly earnings beginning to recover after reaching their lowest point in the third quarter of fiscal 2025. The firm believes Hamamatsu will meet its fiscal 2025 forecasts, which were revised downward on August 7.
For fiscal 2026, Morgan Stanley anticipates only modest year-over-year profit growth due to rising fixed costs associated with a new plant scheduled to begin operations in January 2026. The guidance for fiscal 2026 is expected to be announced in November.
Key factors for Hamamatsu’s future performance include inventory reduction, maximizing free cash flow, President Maruno’s efforts to break down barriers between four divisions to optimize operations, and potential earnings contributions from Denmark-based NKT Photonics, which Hamamatsu acquired for approximately JPY44 billion.
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