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On Thursday, Jefferies analyst Mitsuko Miyasako upgraded shares of KOSE Corporation (4922:JP) (OTC: KSRYY) from Underperform to Hold, setting a price target of JPY6,000.00. The adjustment follows KOSE’s announcement regarding contemplated price hikes in Japan for the fiscal year ending December 2025. According to InvestingPro analysis, KOSE, with a market capitalization of $2.5 billion, currently appears undervalued based on its Fair Value assessment.
Miyasako noted the ongoing price increases in foreign-capital cosmetics and jewelry at department stores, which are expected to boost average spending in these retail venues. The analyst believes that this trend could help KOSE overcome concerns about meeting high year-over-year revenue targets in the Japanese market. InvestingPro data shows the company has maintained solid performance with a 7.44% revenue growth and impressive gross profit margins of 69%.
The company’s strategic decision to adjust prices comes as department stores witness a steady advancement in the cost of luxury goods, which tends to indicate a healthy consumer spending environment. This could potentially benefit KOSE by creating a more favorable pricing scenario for its products. The company’s strong financial position is evidenced by its healthy current ratio of 3.38 and 25-year track record of consistent dividend payments, as revealed by InvestingPro data (subscribers can access 6 additional ProTips and comprehensive financial metrics).
KOSE, known for its skincare and cosmetics products, has been navigating the competitive beauty industry landscape, where pricing strategies often play a crucial role in maintaining market share. The anticipated price hikes are seen as a move to align with broader market trends and to sustain revenue growth.
The new price target of JPY6,000.00 represents an updated valuation by Jefferies, reflecting the potential impact of the company’s pricing strategy on its financial performance. The upgrade to a Hold rating suggests a neutral outlook on the stock, indicating that the risks and rewards are now more balanced from the perspective of the firm.
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