On Friday, Komatsu (OTC:KMTUY) Ltd (6301:JP) (OTC: KMTUY) experienced a downgrade in its stock rating by BofA Securities from Neutral to Underperform. The firm also reduced the price target for Komatsu to JPY3,500 from the previous target of JPY4,900. This adjustment by BofA Securities is primarily due to changes in their fiscal year March 2025 operating profit forecast, influenced by new forex assumptions.
BofA Securities has updated its currency exchange rate expectations to ¥140/USD and ¥160/EUR. The revised forecast includes a reduction in expected equipment volume sales in Europe, which has been somewhat balanced by increased projections for China and Asia, excluding China. The outlook for North America remains the same, with BofA Securities already anticipating a slowdown in that market for the current year.
The firm's forecast for the fiscal year ending March 2026 also underwent modifications, with the growth assumption for North American construction equipment being lowered from a 3% year-over-year increase to a 6% year-over-year decrease. Despite these changes, the projections for other regions have remained largely unchanged.
The decline in the operating profit forecast for FY3/26 compared to FY3/25 is a result of these revised assumptions, leading to the significant reduction in Komatsu's price target. The updated analysis by BofA Securities reflects their latest expectations for the company's performance in the coming fiscal years, considering the global economic environment and currency market dynamics.
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