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Investing.com - Morgan Stanley (NYSE:MS) downgraded Gunze Ltd (TYO:3002) from Overweight to Equalweight on Wednesday, while raising its price target to JPY3,500.00 from JPY3,050.00.
The downgrade comes as Morgan Stanley’s forecast aligns with Gunze’s own guidance, projecting approximately 0.6 billion yen in year-over-year operating profit growth. Half of this projected growth is expected to come from Gunze’s exit from its electronic components operations.
Morgan Stanley noted that while the company’s guidance contains conservative elements, the firm matched its forecast due to concerns about potential additional restructuring costs in Gunze’s apparel segment.
The widening extraordinary losses modeled by Morgan Stanley are primarily related to the ongoing apparel restructuring efforts at Gunze. This restructuring appears to be a key factor in the rating downgrade despite the higher price target.
Morgan Stanley also indicated there is potential for Gunze to generate additional extraordinary profits through property sales, which could partially offset some of the restructuring costs.
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