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Jefferies downgraded TechnoPro (6028:JP) (OTC:TCCNY) from Buy to Hold on Thursday, while raising its price target to JPY4,000.00 from JPY3,800.00. The downgrade follows a significant rally in TechnoPro shares after privatization speculation emerged.
The stock price surge came after a May 16 report in Mergermarket newsletter suggested TechnoPro could be exploring a potential delisting following a takeover. TechnoPro responded that "no decision has been made at the time," while acknowledging it continues to explore various opportunities including privatization.
Jefferies cited full valuation as the primary reason for the downgrade, noting TechnoPro now trades at approximately 25 times its projected FY6/26 earnings. The firm indicated its previous price target has been reached, prompting the rating change despite the higher price objective.
The research firm outlined a potential scenario where private equity investors might attempt to consolidate key players in the staffing sector. Such consolidation could create a combined entity with approximately 30% market share, compared to TechnoPro’s current estimated leading position of 7%.
Jefferies suggested that such consolidation could enable price increases and wage hikes, potentially improving profitability across the staffing sector. The firm identified private equity interest at a premium as an upside risk that could drive further share price appreciation.
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