On Friday, Jefferies adjusted its outlook on M3, Inc shares (2413:JP) (OTC: MTHRF), reducing the price target to ¥1,400 from the previous ¥1,400 while retaining a Hold rating on the stock. The revision follows a recent discussion with the company’s Investor Relations team, which led to an update in the firm’s financial estimates.
The decision to lower the price target comes as M3’s Medical (TASE:PMCN) Platform Fee (MPF) has experienced a year of negative growth, with no clear indicators of a return to positive figures in the near future. The third quarter is expected to continue this trend, contributing to the revised valuation.
In addition to the concerns over the MPF, Jefferies highlighted several other factors that influenced their decision. These include a potential slowdown in the company’s SS segment in the second half of the year, a lack of momentum in M3’s United States operations, and a decline in margins resulting from the consolidation of ELAN, a recent acquisition.
The forecasted recovery of the MPF, initially anticipated to occur in the third quarter, remains uncertain. The analyst from Jefferies noted that with the bottoming out of the MPF being unclear and the absence of new growth drivers, the Hold rating is justified based on the company’s valuation. The report reflects a cautious outlook on the company’s short-term performance prospects.
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