TSX runs higher on rate cut expectations
Jefferies upgraded Mercari , Inc (TYO:4385:JP) (OTC:MRCIF) from Hold to Buy on Friday, raising its price target to JPY3,200.00 from JPY2,650.00. The upgrade comes as Jefferies views Mercari as undervalued compared to other Japanese internet stocks.
The research firm noted that many Japanese internet companies have been positioned as safe havens following U.S. reciprocal tariff announcements, pushing valuations to the high end of historical ranges. Mercari has lagged behind peers in this sector, creating a potential opportunity for investors.
Mercari successfully turned its U.S. operating loss to profit this fiscal year, allowing the company to shift focus toward sales growth in the coming fiscal year. The monetization of Mercari Hallo, which began in the fourth quarter, is expected to help reduce operating losses next fiscal year as the service begins generating revenue.
Jefferies estimates that while Hallo will still generate an operating loss of ¥2.5 billion, this represents a significant improvement from the estimated ¥8 billion+ annual loss previously. The firm also sees room for improvement in Mercari’s Japanese marketplace operations.
The research firm highlighted that Mercari’s steady Fintech business is strengthening its ecosystem, creating additional opportunities for revenue generation in the future. Jefferies believes the company’s evident challenges are already reflected in its discounted valuation.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.