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Investing.com - Jefferies has upgraded Rakus Co Ltd (3923:JP) from Hold to Buy, while raising its price target to JPY3,220.00 from JPY2,400.00, citing the company’s shift toward core business growth and margin improvement.
The new price target represents a P/E of 40x and EV/sales of 7.7x, reflecting a premium valuation compared to competitors MF and freee, according to Jefferies’ analysis.
Jefferies based its upgrade on multiple factors, including Rakus’s "Rule of 50" target and expectations for accelerated operating profit margin improvement beginning in fiscal year 2026.
The firm also highlighted Rakus’s plans to divest its IT outsourcing business, which is generating higher-than-expected earnings, with potential capital gains that could fund share buybacks if no other immediate investment opportunities arise.
Jefferies noted Rakus’s proactive AI integration as another positive factor, with approximately 30% of new code being AI-generated, creating additional room for internal efficiency improvements despite the company’s RakuRakuSeisan product approaching maturity.
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