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On Thursday, JPMorgan initiated coverage of ASICS Corporation (7936:JP) (OTC: ASCCY), a global leader in the running market, assigning an Overweight rating and a price target of ¥4,300.00. The firm’s analysts highlighted their positive outlook based on several factors, including anticipated improvements in profitability and strong performance in core businesses. The company’s strong financial position is reflected in its "GREAT" overall health score according to InvestingPro, with an impressive gross margin of 56% and revenue growth of 19% over the last twelve months.
The analysts project a three-year operating profit compound annual growth rate (CAGR) of +18% for ASICS. They also anticipate that ASICS will maintain its valuation premium due to its prominent position in the running market. This optimistic stance is further bolstered by expectations of significant earnings structure reforms in FY2025. InvestingPro data reveals the company is trading at an attractive PEG ratio of 0.46, suggesting reasonable valuation relative to its growth prospects.
According to JPMorgan, ASICS is poised to see a gross margin improvement that will contribute more than ¥10 billion to operating profit, surpassing current guidance. This forecast is part of the rationale behind the Overweight rating and the ¥4,300 price target.
The coverage initiation follows a period of strong performance for ASICS stock, which has outperformed in the stock market. JPMorgan expects this momentum to continue, driven by potential earnings revisions. The firm’s analysis suggests that ASICS’s strategic initiatives and market positioning will continue to fuel its growth and stock performance in the near future.
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