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On Friday, Jefferies made an adjustment to the rating of Obic Co Ltd (4684:JP) (OTC: OBIIF), downgrading the stock from Buy to Hold while maintaining the price target at JPY5,140.00. The change in rating follows a recent shift in the market, which saw an increased focus on domestic demand-related stocks, a category in which Obic is considered a defensive play.
The price target set by Jefferies corresponds to a price-to-earnings (P/E) ratio of 32.5 times based on the estimated earnings per share (EPS) of JPY158.1 for the fiscal year ending March 2026. This valuation takes into account the company's recent 5-to-1 stock split. The split adjusted the share price and the number of shares outstanding, impacting the calculations of per-share metrics.
Jefferies had anticipated a share buyback program from Obic, which often serves as a catalyst for stock price appreciation. However, following the company's decision to execute a stock split during the current fiscal year, the firm now believes that Obic may delay the initiation of any buyback program to the next fiscal year.
The hold rating signifies that Jefferies does not currently recommend adding to positions in Obic stock, but also does not suggest selling existing holdings. The decision to maintain the price target indicates that the firm believes the stock is fairly valued at the current level, considering the market's recent behavior and Obic's financial projections.
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