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Investing.com - JPMorgan downgraded Rakuten Bank Ltd (TYO:5838) from Overweight to Neutral while raising its price target to JPY8,050.00 from JPY7,860.00.
The rating change follows a sharp 30% rise in Rakuten Bank shares since the release of its first-quarter fiscal year 2025 results, climbing from JPY6,635 on August 6 to JPY8,626 on August 15, significantly outperforming the TOPIX Index’s 1.6% gain during the same period.
JPMorgan’s new price target of JPY8,050 sits approximately 7% below the August 15 closing price of JPY8,626, suggesting limited upside potential despite the higher target.
The bank disclosed improved year-over-year deposit balance growth at the end of July, which JPMorgan believes has led investors to take a more positive view of Rakuten Bank’s organic growth potential.
While JPMorgan maintains a positive outlook on Rakuten Bank’s fundamentals, it believes market expectations for the bank to maintain deposit growth of around 10% are now fully priced into the stock, prompting the downgrade despite using a higher target price-to-earnings ratio of 15x compared to general banks.
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