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On Thursday, JPMorgan analysts downgraded SCSK Corporation (9719:JP) (OTC:SCSKF) stock from an Overweight to a Neutral rating. The decision comes as the shares have reached the firm’s price target, prompting a reevaluation of earnings estimates and projections.
The analysts set a revised price target of ¥4,400, up from the previous target of ¥4,200. This adjustment reflects the company’s fiscal year 2024 results and subsequent research. The price target is based on a price-to-earnings (P/E) ratio of approximately 22 times the fiscal year 2026 earnings per share (EPS) estimate of ¥201, compared to the earlier estimate of ¥191.
The analysts highlighted that while integration synergies are anticipated to be a key theme in the longer term, the current stock price has prompted the rating adjustment. SCSK Corporation is expected to hold a briefing on integration synergies in the first half of fiscal year 2025 to further detail these prospects.
Additional factors such as a forecasted return on equity (ROE) of just over 18% and an M&A budget within the current medium-term plan of ¥50-70 billion are expected to provide support for the company’s shares moving forward.
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