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On Thursday, JPMorgan resumed its coverage on Nomura Holdings (NYSE:NMR) Inc. (8604:JP) (NYSE: NMR) stock, assigning a Neutral rating and establishing a price target of ¥960. The firm's previous position on the company was Not Rated, following an Underweight rating with a December 2023 price target of ¥450. The new price target is set for December 2025.
The coverage update reflects a significant increase in the price target based on a detailed financial analysis. JPMorgan applied a target Price to Book Ratio (PBR) of 0.76x to their end-financial year 2025 Book Value Per Share (BPS) estimate of ¥1,264. The firm's calculations include a cost of equity at 9.5% to arrive at the new price target.
In their assessment, JPMorgan acknowledged that Nomura Holdings has the potential to outperform, contingent on the direction of the business environment. Nomura's high beta indicates that its stock price could be more volatile in response to market movements.
However, the firm also noted that Nomura Holdings appears to be trailing behind Daiwa Securities Group concerning profit stability, predictability of shareholder returns, and efficiency of capital allocation. These factors contributed to the decision to maintain a Neutral stance on the stock rather than a more bullish or bearish rating.
Investors and market watchers now have updated guidance from JPMorgan on the outlook for Nomura Holdings as it navigates the financial services sector. The new price target suggests a more optimistic view of the company's value in the coming years, compared to the previous assessment.
In other recent news, Nomura Holdings reported a steady increase in net revenue and net income for the first quarter of the fiscal year ending March 2025, continuing its five-quarter earnings momentum. The group's net revenue rose by 2% to ¥454.4 billion, pre-tax income by 12% to ¥102.9 billion, and net income by 21% to ¥68.9 billion. Notably, the Wealth Management and Asset Management segments experienced growth, while the Wholesale segment saw a decrease in net revenue.
In other financial developments, major brokerages including J.P. Morgan, Citigroup, and Wells Fargo are projecting that the Federal Reserve will lower interest rates in the upcoming months. The consensus points towards a 25 basis points reduction, following recent economic indicators such as a rise in the U.S. unemployment rate and an uptick in July's retail sales. These estimates come from a range of financial institutions, including Goldman Sachs, Nomura, Deutsche Bank, Morgan Stanley, and Barclays.
These are recent developments and provide insight into Nomura Holdings' performance and the broader financial landscape. Analysts from firms like J.P. Morgan and Citigroup provide valuable prognostications about the Federal Reserve's actions, while Nomura Holdings' earnings data offers a snapshot of the company's financial health. It's important to note that these findings and predictions are based on available data and expert analysis, not personal opinions or speculation.
InvestingPro Insights
In light of JPMorgan's updated coverage of Nomura Holdings Inc., real-time data from InvestingPro provides additional context for investors considering the stock. Nomura has demonstrated robust financial performance with a revenue growth of 20.62% over the last twelve months as of Q1 2023, highlighting its strong position in the market. Additionally, the company's P/E ratio stands at a competitive 11.8, indicating that the stock may be trading at an attractive price relative to its earnings.
InvestingPro Tips further enrich the analysis by noting Nomura's perfect Piotroski Score of 9, which signals sound financial health, and its low P/E ratio in comparison to near-term earnings growth, suggesting potential undervaluation. Furthermore, Nomura's status as a prominent player in the Capital Markets industry and its impressive track record of maintaining dividend payments for 33 consecutive years provide a level of reassurance for income-focused investors.
For those seeking deeper insights, InvestingPro offers additional tips on Nomura Holdings, which can be found at https://www.investing.com/pro/NMR. These tips could further inform investment decisions and strategy regarding this well-established financial institution.
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