S&P 500 eases slightly from fresh record high after stronger economic growth
On Monday, JPMorgan initiated coverage on Kirin Holdings Co Ltd (2503:JP) (OTC: KNBWY), assigning a Neutral rating to the company's shares and establishing a price target of ¥2,100. The move comes as the analyst projects an annual profit growth of 7% from FY2024 to FY2027, with a 5% increase excluding the effects of FANCL's consolidation.
The Japan-based segment of Kirin's business is anticipated to benefit from price hikes, along with positive impacts from the consolidation of FANCL and reduced losses at Kyowa Hakko Bio. These factors are expected to contribute significantly to the company's profit growth.
Since FY2019, Kirin has been shifting its focus toward its health science business, moving away from its traditional stronghold in beer and other beverages. This strategic pivot has involved multiple acquisitions aimed at expanding the health science division of the company.
Despite these efforts, Kirin's share price has remained relatively unchanged since 2019. According to JPMorgan, this stagnation may indicate that the stock market has yet to acknowledge the company's strategic shift. The analyst suggests that Kirin's history of impairment losses on acquisitions and the slow profitability of the health science business could be factors in the market's tepid response.
For Kirin's stock price to experience an uptick, the company will need to demonstrate growth in its health science business. JPMorgan anticipates that Kirin will continue to execute its strategy with consistency, which could eventually lead to recognition from the market and an increase in share value.
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