Jefferies Maintains Buy Rating on Kokusai Electric Corp, Lowers Price Target After Strong Q1 Results
In a recent report, Jefferies has affirmed its Buy rating on Kokusai Electric Corp (6525:JP) while adjusting the price target to ¥5,400 from ¥6,000 following the company's impressive first-quarter results released on August 9. The report highlights a remarkable year-over-year increase in operating profit, reaching ¥17.9 billion, a 348% surge that exceeded market expectations.
Kokusai Electric attributed its growth in sales and profit to increased shipments in China and strong performance in legacy applications. The company's first-quarter orders also saw a significant uptick, estimated at ¥40.0 billion, indicating a ¥10.0 billion increase from the previous quarter, driven by sustained high demand from China.
Despite the positive performance, Jefferies revised its price target for Kokusai Electric due to a valuation adjustment. The firm maintains its full-year guidance for the fiscal year ending March 2025 but sees potential for further upside. Jefferies has raised its estimates while recalibrating the price target to align with the revised valuation.
In conclusion, the report emphasizes the analyst's positive outlook on Kokusai Electric, maintaining a Buy rating despite the price target adjustment. The analyst believes that the unchanged full-year guidance could pave the way for better-than-expected performance in the future.
Analysis:
Kokusai Electric Corp has shown impressive growth in its recent financial results, with a significant increase in operating profit and orders. The company's focus on the Chinese market and strong performance in legacy applications have driven this success. Jefferies' revised price target reflects a valuation adjustment while maintaining a positive outlook on the company's future performance. Investors should consider these factors when making investment decisions related to Kokusai Electric.