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Nomura/Instinet initiated coverage of Sakura Internet Inc (TYO:3778:JP) with a neutral rating and a price target of JPY3,975.00, citing the company’s data center operations and GPU server leasing services.
The Japanese cloud service provider experienced a share price decline in March due to projections of an 8% year-over-year decrease in operating profits, primarily attributed to increased depreciation costs for GPU servers, according to Nomura.
Despite near-term profit pressure, Nomura forecasts Sakura’s EBITDA will reach ¥23.0 billion by March 2029, with operating profits of ¥12.2 billion driven by increased GPU server-related sales.
Nomura derived its JPY3,975 target price using an EV/EBITDA multiple of 6.75x, referencing the Russell/Nomura Small Cap (excluding financials) average and using fiscal year 2029 as its base year when GPU investments are expected to yield results.
The research firm identified the successful development of Sakura’s government cloud service as a potential catalyst for future share price appreciation, noting the company currently receives government aid for its public cloud services.
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