Paramount stock rises after FCC approves Skydance merger
On Wednesday, Jefferies, a global investment banking firm, downgraded Idemitsu Kosan Co Ltd (TYO:5019:JP) stock from ’Buy’ to ’Hold’ and decreased its price target to ¥1,250 from ¥1,400. The revision reflects a cautious stance on the company’s prospects amid changing market conditions.
Jefferies analysts have revised their operating profit and net profit forecasts for Idemitsu Kosan, citing weaker thermal coal and crude oil prices as the primary reasons for the adjustment. However, the firm has increased its dividend estimates for the company. Despite these changes, Jefferies’ projections remain slightly below the consensus.
The downgrade comes as Idemitsu Kosan’s stock trades near all-time highs, having appreciated by 44.6% since January 2024. Jefferies acknowledges the company’s commitment to achieving a double-digit return on equity and anticipates ¥100 billion in share buybacks annually over the next two years. Nevertheless, the analysts believe that the market has already factored in the company’s focus on return on invested capital.
Idemitsu Kosan’s reliance on thermal coal and crude oil within its Resources businesses is a point of concern for Jefferies. The firm notes that while thermal coal prices have previously surged due to supply and demand imbalances stemming from the war in Ukraine, the market has seen improvements. Additionally, demand for thermal coal is waning as decarbonization efforts intensify and China’s consumption declines structurally. These factors contribute to Jefferies’ decision to adjust their outlook and price target for Idemitsu Kosan.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.