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Investing.com - Jefferies upgraded Internet Initiative Japan Inc (TYO:3774) (OTC:IIJIY), a prominent player in diversified telecommunication services with a market capitalization of $3.49 billion, from Hold to Buy on Thursday, raising its price target to JPY3,600.00 from JPY3,000.00.
The upgrade represents a 20% increase in the price target and comes after the stock has underperformed relative to its sector peers, despite posting solid revenue growth of 12.19% in the last twelve months. According to InvestingPro analysis, the stock is currently trading near its Fair Value.
Jefferies cited valuation as the primary reason for the upgrade, noting that Internet Initiative Japan has been "trading at a discount to the other SI stocks due to the VMWare and cyber security incidents."
The firm believes these concerns are "now priced in with the Q1 results" and set the new price target at 23.1x P/E, which it describes as "a benchmark for the sector average based on next-year EPS."
Jefferies made the valuation call due to "a more-than 15% gap" to its price target, while also noting that "most of the stocks with stable fundamentals are trading near the upper end of their valuation ranges or beyond."
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