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Morgan Stanley (NYSE:MS) upgraded Kureha Corp (4023:JP) from Underweight to Equalweight on Thursday, raising its price target to JPY2,800.00 from JPY2,200.00.
The upgrade comes as Kureha has expanded its dividend program for a limited period, despite ongoing weak earnings performance at the Japanese chemical company.
Morgan Stanley cited the strong dividend policy as justification for price-to-earnings valuations above the average for fine chemicals stocks, despite earnings recovery still being a work in progress.
The new price target is based on a fiscal year 2027 P/E multiple of 12.2x, up from the previous 11.0x that was in line with the fine chemicals sector average.
The target multiple now equates to Kureha’s 10-year historical average plus one standard deviation, according to Morgan Stanley’s analysis of the company’s valuation metrics.
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