Palantir shares rise 5% premarket as AI-fueled demand powers annual guidance raise
On Wednesday, TechnoPro Holdings, Inc. (6028:JP) (OTC: TCCNY) experienced a shift in stock rating, as it was downgraded from "Buy" to "Hold" by an analyst at Jefferies. Accompanying this change, the price target for the stock was also adjusted to JPY2,900.00 from the previous target of JPY3,900.00.
The adjustment in rating and price target is in response to concerns regarding TechnoPro's increasing turnover ratio. For the fiscal year ending June 2024, TechnoPro's turnover ratio was reported at 9.1%, a noticeable increase from the 7.7% observed for the fiscal year ending June 2023. In particular, the fourth quarter's annualized figures showed a turnover ratio of 10.8%.
The analyst highlighted several implications of the rising turnover ratio. Firstly, it suggests that TechnoPro's most seasoned engineers are leaving the company, affecting the business that typically brings in higher margins.
Secondly, to fill the vacancies left by mid-level workers, TechnoPro is compelled to hire recent graduates. These new hires generally require 6 to 12 months to become fully productive, which incurs additional costs for the company.
Lastly, the ongoing turnover cycle is expected to persist as client companies, particularly in the IT services sector, can offer wage increases at a more rapid pace than TechnoPro can match.
This dynamic could potentially continue to impact the company's operations and financial performance, leading to Jefferies' decision to downgrade the stock.
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