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On Tuesday, Morgan Stanley adjusted its financial outlook for Toyo Suisan Kaisha Ltd. (2875:JP) (OTC: TSUKF), reducing the price target to JPY10,500 from the previous JPY11,400. Despite the lower price target, the firm maintained its Overweight rating on the company's stock.
In a recent statement, Morgan Stanley detailed the rationale behind the adjustment, citing a new price target based on a fair price-to-earnings (P/E) ratio of 17 times, applied to the anticipated earnings per share (EPS) of JPY619 for the fiscal year ending March 2026 (F3/26). The firm's decision reflects a recalibration of expectations while still recognizing the company's potential for growth.
Toyo Suisan's operational performance is expected to see a year-over-year increase of 10% in the fiscal year ending March 2025 (F3/25). A significant contributor to this growth is the company's overseas instant noodles segment, which is projected to maintain a robust growth rate of 9%, or 13% on a forex neutral basis.
Additionally, Toyo Suisan has recently engaged in a share buyback program. Morgan Stanley anticipates that within the next year, the company may announce a more generous policy for long-term shareholder returns. The firm suggests that such a development could lead to a further revaluation of Toyo Suisan's shares in the market.
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