UBS cuts Murata Manufacturing stock price target to JPY3,100

On Thursday, UBS analyst Shingo Hirata adjusted the price target for Murata Manufacturing Co (OTC:MRAAY) Ltd. (6981:JP) (OTC: MRAAY), a prominent player in the Electronic Equipment industry with a market capitalization of $27.91 billion, to JPY3,100 from JPY3,300. Despite the price target reduction, the firm maintained a Buy rating on the stock. According to InvestingPro analysis, the company maintains a strong financial health score of GOOD, supported by robust balance sheet metrics.

In his assessment, Hirata highlighted the anticipated growth in the MLCC (multilayer ceramic capacitor) market, which is expected to increase by 8-12% year-over-year starting from 2026. This growth projection, complementing the company’s current revenue growth of 7.8%, is based on the expansion of AI applications, advancements in electric vehicles (xEVs), and improvements in Advanced Driver-Assistance Systems (ADAS).

The analyst also projected a positive outlook for Murata’s telecom modules and batteries, forecasting a turnaround in earnings from the fiscal year ending March 2026 (FY3/26). This optimism stems from the company’s strategic positioning in the market and its potential for revenue growth in these segments. InvestingPro data reveals the company holds more cash than debt and has maintained dividend payments for 45 consecutive years, demonstrating financial stability.

Murata’s current trading valuation, with a Price Earnings Ratio (PER) of 14 times the FY3/26E, was noted as appearing significantly undervalued when compared to its historical range. The valuation suggests an implied decline in FY3/26 profit of 20-30%, which seems to offer an attractive entry point for investors, according to the UBS analyst.

Hirata’s comments underscored a strong confidence in Murata Manufacturing’s future prospects, emphasizing the company’s potential for recovery and growth in key areas of its business. The maintained Buy rating, despite the lowered price target, reflects an ongoing positive sentiment towards the company’s stock performance in the coming years.

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