TechnoPro Holdings, Inc. (6028:JP) Downgraded to Hold by Jefferies Analyst - Stock Price Target Adjusted
In a recent development, TechnoPro Holdings, Inc. (6028:JP) (OTC: TCCNY) saw a shift in its stock rating from "Buy" to "Hold" by an analyst at Jefferies. Along with this change, the price target for the stock was also revised to JPY2,900.00 from the previous target of JPY3,900.00.
This adjustment comes in light of concerns surrounding TechnoPro's increasing turnover ratio. The turnover ratio for the fiscal year ending June 2024 was reported at 9.1%, up from 7.7% in the previous fiscal year. Notably, the fourth quarter's annualized figures showed a turnover ratio of 10.8%.
The rising turnover ratio indicates that TechnoPro's experienced engineers are leaving the company, impacting the business's higher margin segments. To fill the vacancies left by these mid-level workers, TechnoPro is hiring recent graduates, who typically take 6 to 12 months to become fully productive, leading to additional costs for the company.
Furthermore, the ongoing turnover cycle is expected to continue as client companies, especially in the IT services sector, can offer wage increases at a faster rate than TechnoPro. This trend could have a lasting impact on the company's operations and financial performance, prompting Jefferies to downgrade the stock.
In conclusion, investors should closely monitor TechnoPro Holdings, Inc. as the recent downgrade and adjustments in price target may signal potential challenges for the company's future growth and profitability. It is essential to consider the implications of the rising turnover ratio on TechnoPro's business strategy and financial outlook to make informed investment decisions.