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Investing.com - JPMorgan downgraded Yamazaki Baking (2212:JP) from Overweight to Neutral on Tuesday, while lowering its price target to JPY3,500.00 from JPY3,650.00.
The downgrade comes despite strong current demand for affordable bread products, which JPMorgan attributes to ongoing food price inflation and high 2025 new rice prices that continue to drive consumers toward bread alternatives.
Yamazaki Baking stock has risen 16% year to date as of August 29, outperforming both the TOPIX index (up 10%) and the TOPIX food sector index (up 4%), reflecting the company’s strong position in the current market environment.
JPMorgan’s revised outlook stems from concerns about FY2026 and beyond, when the firm expects volume growth to face higher hurdles and the positive effects of revenue growth, including price increases, to diminish.
The investment bank anticipates that increasing labor and logistics costs will weigh on profit growth in coming years, leading to a slight decline in return on equity, with the new price target based on FY2026 earnings estimates and a price-to-earnings ratio of 17x.
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