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On Monday, Morgan Stanley (NYSE:MS) updated its outlook on Kirin Holdings Co Ltd (2503:JP) (OTC: KNBWY), raising the company's price target from ¥2,200 to ¥2,250, while sustaining an Equalweight rating on the stock. The adjustment comes after a thorough review of the beverage company's earnings trends through the third quarter. According to InvestingPro analysis, Kirin currently trades at a P/E ratio of 14.88x and shows signs of being undervalued based on its Fair Value assessment.
The new price target reflects Morgan Stanley's analysis of several factors influencing Kirin's financial performance. The consolidation effects of FANCL, a health and beauty supplements business acquired by Kirin, were taken into consideration. Despite challenges, InvestingPro data shows strong fundamentals with revenue growth of 9.91% and EBITDA of $2.05 billion in the last twelve months. However, the overall business profit forecast saw only modest revisions for two main reasons. Firstly, there was a slight downgrade in the expected earnings from Lion, Kirin's Australian beverage and food company, due to challenging market conditions in Australia. Secondly, slower progress than anticipated in reducing losses at Kyowa Hakko Bio, a biotechnology affiliate of Kirin, also influenced the estimates for fiscal years 2025 to 2026.
Morgan Stanley's analysts arrived at the new price target by applying a price-to-earnings (P/E) ratio of 13 times to the forecasted earnings per share (EPS) of ¥173 for fiscal year 2025. The target multiple assumption remains the same as in previous evaluations.
The price target increase indicates a nuanced perspective on Kirin's financial outlook, acknowledging both the positive impact of strategic acquisitions and the challenges faced in specific segments of the company's diverse portfolio. Kirin Holdings Co Ltd's stock price will continue to be watched closely by investors as the company navigates the evolving market landscape.
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