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On Tuesday, BofA Securities adjusted its stance on Murata Manufacturing Co Ltd. (6981:JP) (OTC:MRAAY), shifting the rating from Buy to Neutral and revising the price target downward to JPY2,280.00 from the previous JPY2,700.00. The decision came after the firm’s revised earnings estimates for the company, acknowledging a deceleration in the devices & modules segment that Murata operates in.
Analysts at BofA Securities noted a decrease in their earnings projections for Murata Manufacturing, with the operating profit forecast for the fiscal year ending March 2026 now set at JPY232.3 billion, down from JPY327.8 billion. Similarly, the estimate for the following fiscal year ending March 2027 has been adjusted from JPY368.7 billion to JPY310.3 billion. This reassessment of Murata’s financial prospects has directly influenced the reduction in the price target.
The new price objective set by BofA Securities is based on a price-to-earnings (P/E) ratio of 18 times the firm’s forecasted earnings per share (EPS) for the fiscal year ending March 2027. This marks a shift from the previous valuation, which used a P/E ratio of 21 times the estimated EPS for the fiscal year ending March 2026. The analysts have incorporated an assumed exchange rate of JPY145 to the US dollar in their earnings estimates.
The downgrade reflects BofA Securities’ recalibrated expectations for Murata Manufacturing, taking into account the less favorable outlook for the company’s devices & modules segment. The analysts’ commentary highlighted the reasons behind the lowered earnings estimates and subsequent adjustment in Murata’s investment rating and price target.
Murata Manufacturing, known for its electronic components, faces new challenges as BofA Securities’ latest analysis suggests a more cautious view of the company’s financial performance in the coming years. Investors and market watchers will likely monitor how the company navigates the slowdown in its key business segment.
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