Broadcom named strategic vendor for Walmart virtualization solutions
On Thursday, Morgan Stanley (NYSE:MS) reiterated its Equal-weight rating on Softbank (OTC:SFTBY) Group Corp. (9984:JP) (OTC: SFTBY) and maintained a price target of JPY9,000.00. The firm also highlighted Softbank as a Research Tactical Idea, indicating an expected rise in share price relative to the country index over the next 60 days. According to InvestingPro data, the stock trades at a P/E ratio of 7.26 and has shown remarkable momentum with a 15.75% return in the past week, though technical indicators suggest the stock may be approaching overbought territory.
The optimism from Morgan Stanley stems from the potential impact of Softbank Group's Stargate project on the company's share price. Historically, Softbank's stock has shown significant price movements in anticipation of major events. Analysts at Morgan Stanley drew parallels to past occurrences such as the stronger valuations from Softbank Vision Fund's investments in 'unicorn' companies in late 2018, the large-scale share buyback program as part of a ¥5 trillion asset monetization initiative during 2020-2021, and the heightened expectations for an increase in corporate value ahead of the planned IPO of ARM from late 2022 to mid-2023. The company's track record of value creation is reflected in its strong financial performance, with an EBITDA of $10.1 billion in the last twelve months.
The analysts believe that the Stargate project could spark similar investor expectations, contributing to a contraction of the net asset value (NAV) discount. They are closely monitoring the situation to see if this discount will reach the 40% level. Furthermore, they anticipate that a series of forthcoming events, along with President Masayoshi Son presenting a growth scenario to the capital market, could further influence Softbank's share valuation in the near term.
Softbank Group has experienced fluctuations in its share price tied to investor expectations surrounding significant corporate developments. The Stargate project is the latest to potentially influence the company's stock performance, as market participants look forward to its long-term prospects and impact on Softbank's growth narrative. While the company maintains a significant debt burden, InvestingPro analysis reveals over 10 additional key insights about Softbank's financial health and market position. For deeper analysis and comprehensive valuation metrics, investors can access the detailed Pro Research Report, available exclusively to InvestingPro subscribers.
In other recent news, SoftBank (TYO:9984) Group Corp. has experienced significant developments, both financially and strategically. The company reported a net income surpassing JPY 1 trillion for the six-month period ending September 2024, largely attributed to substantial investment gains from the Vision Fund and T-Mobile. The Vision Fund's gains alone reached JPY 2.6 trillion, marking its first cumulative gain in nine quarters. Furthermore, SoftBank's net asset value was reported at JPY 29 trillion, with anticipated cash reserves exceeding JPY 4 trillion.
On the strategic front, SoftBank has made notable investments in AI, including a $500 million investment in OpenAI. However, Jefferies downgraded SoftBank from "Buy" to "Hold," expressing concerns over SoftBank's announced commitment to invest $100-200 billion in the United States over the next four years, questioning potential funding sources and the consequent impact on the company's financial health.
Despite the downgrade, analysts from various firms have noted SoftBank's strong performance and strategic investment choices. Regardless of potential changes in U.S. policy, SoftBank remains optimistic about its private equity portfolio, particularly its investments in ByteDance and OpenAI. These are the recent developments that have shaped SoftBank's business strategy and financial performance.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.