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On Friday, UBS analyst Rei Ihara adjusted the outlook on Kikkoman Corp (2801:JP), downgrading the stock from Buy to Neutral and significantly reducing the price target from JPY2,000.00 to JPY1,400.00. The revision reflects a decrease in the expected earnings per share (EPS) for the fiscal years 2026 to 2028 by 4-5%, leading to a lower valuation multiple for the company.
Ihara noted that while the macroeconomic environment presents some instability, Kikkoman’s growth momentum overseas remains consistent. However, the downgrade was prompted by the company’s perceived lack of attention to capital efficiency, despite its high valuation multiples. Ihara pointed out that the food sector is actively enhancing shareholder returns in response to the pressure from weak share price valuations, which is shaping a market less favorable to companies solely banking on international expansion for positive perception.
UBS’s analysis acknowledges recent changes at Kikkoman, such as the termination of its takeover defense policy and the execution of share buybacks for three consecutive years. Yet, according to Ihara, these changes are not happening at the pace the market demands. He suggests that Kikkoman needs to engage more with the market to be reevaluated positively by investors.
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