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Investing.com - JPMorgan downgraded West Japan Railway (9021:JP) (OTC:WJRYY) from Overweight to Neutral while raising its price target to JPY3,650.00 from JPY3,600.00.
The rating change comes despite the slight price target increase, with JPMorgan citing limited upside potential following a recent rally in the company’s share price.
The investment bank adjusted its time horizon from December 2025 to December 2026 in its valuation model, but expressed concerns about the railway operator’s medium-term outlook starting in FY2026, which it now considers was previously too optimistic.
JPMorgan expects West Japan Railway to outline long-term profit growth in its upcoming medium-term plan, but anticipates near-term profit stagnation due to upfront investments and costs.
The firm also noted that West Japan Railway’s focus on investment may limit significant improvements in shareholder returns, and if the company maintains its 35% dividend payout ratio policy, its dividend yield appeal could gradually decline relative to other Japanese railway companies.
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