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Investing.com - JPMorgan has initiated coverage on Mitsui & Co Ltd. (8031:JP) (OTC:MITSY) with an Overweight rating and a price target of JPY4,720.00.
The financial services firm sees significant upside potential for the Japanese trading company if it begins to take corporate actions to improve its return on equity (ROE), despite recent share price underperformance amid weak commodity prices.
JPMorgan’s price target is based on the firm’s fiscal year 2025 book value per share estimate and a theoretical price-to-book ratio of 1.69x, calculated using a medium-term ROE forecast of 11.2% and cost of equity of 6.6%.
The investment bank expects Mitsui’s management to announce share buyback plans for fiscal year 2025 after releasing first-half results, which could serve as a catalyst for the stock.
Key factors to monitor include Mitsui’s ROE target in its upcoming medium-term business plan starting in fiscal year 2026, management’s commitment level to achieving that target, and its capital policy and allocation strategy, according to JPMorgan.
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