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On Thursday, Jefferies analysts revised their stance on Kakaku.com Inc. (2371:JP) (OTC: KKKUF), downgrading the company’s stock rating from Buy to Hold and adjusting the price target to ¥2,320 from the previous ¥2,770. The change in rating reflects the anticipation of an investment phase for Kakaku.com in the next fiscal year, which is expected to result in a deceleration of operating profit (OP) growth.
The analysts at Jefferies have projected a period of increased spending for Kakaku.com, foreseeing that the company will enter a phase focused on investments during the upcoming fiscal year. This strategic shift is likely to slow the pace of OP growth as resources are allocated towards securing the company’s future expansion.
Jefferies’ revised price target of ¥2,320, decreased from ¥2,770, indicates a more conservative valuation of Kakaku.com’s shares in light of the expected investment phase. The firm’s analysts have highlighted the necessity for Kakaku.com to navigate its next steps carefully, emphasizing the importance of enhancing revenue streams from its existing operations.
In their commentary, Jefferies analysts stated, "We are downgrading Kakaku from Buy to Hold and cutting the PT to ¥2,320 from ¥2,770. We are assuming that Kakaku will go into an investment phase next FY, leading to a slowdown in OP growth. To secure future growth, Kakaku will need to figure out how to increase revenues from the existing business."
Investors and market watchers will be keeping a close eye on Kakaku.com’s performance and strategic decisions as the company approaches this critical investment phase, which will be pivotal in determining its trajectory for future growth.
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