Goldman Sachs Upgrades Trend Micro (4704:JP) to Neutral Rating with Increased Price Target of ¥8,500 - What Does This Mean for Investors?
On Monday, Goldman Sachs made a significant adjustment to its stance on Trend Micro (OTC:) Incorporated (4704:JP) (OTC: TMICY), upgrading it from a Sell to a Neutral rating and raising the price target to ¥8,500 from ¥6,200. This decision was influenced by the company's second-quarter results for the fiscal year ending December 2024, leading to a reassessment of earnings estimates.
The firm's analyst revised Trend Micro's operating profit forecasts for the fiscal years 2024 through 2026, projecting a steady 0% for 2024 and a slight improvement in the following years, with a 2% and 3% increase respectively. This adjustment reflects the company's effective cost control measures, especially in cloud services, marketing, and outsourcing.
Although sales estimates were lowered due to weaker order trends in Europe, Goldman Sachs raised the target price for Trend Micro shares based on the revised earnings estimates and undisclosed additional factors. The new price target indicates limited upside potential for the stock.
The upgrade to Neutral status follows an evaluation of Trend Micro's stock performance since it was added to Goldman Sachs' Sell list on August 26, 2022. Despite a marginal decline of 0.8% since then, the stock underperformed the index by 37.8% over the same period, with the index gaining 37.0%.
In conclusion, investors should take note of Goldman Sachs' upgraded rating and increased price target for Trend Micro. This adjustment reflects the company's improved cost management and potential for future growth. It is essential for investors to consider this information when making decisions about their investment portfolios to maximize returns and minimize risks.