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Investing.com - UBS downgraded Itoham Yonekyu Holdings Inc (TYO:2296) from Neutral to Sell on Wednesday, while slightly raising its price target to JPY3,800.00 from JPY3,700.00.
The downgrade comes despite UBS raising its FY3/26-28 earnings per share estimates by 7-15%, with the firm citing demanding valuation as the primary reason for the rating cut.
UBS noted that market expectations for continued high shareholder returns, including commemorative dividends, may be overly optimistic, suggesting such dividends are likely to be temporary when considering long-term cash flow.
The firm also addressed market speculation regarding potential portfolio reshuffling by major shareholder Mitsubishi Corp, calling discussions about Itoham Yonekyu potentially becoming a target "premature."
UBS expects sideways profit movement in the near term for the Japanese food company, identifying the ex-rights date for the commemorative dividend as a possible downside catalyst for the stock.
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