On Monday, Goldman Sachs (NYSE:GS) updated its investment outlook on Kuraray Co., Ltd. (3405:JP) (OTC: KURRY), increasing the stock price target to JPY2,090 from JPY1,840. The firm has maintained a Buy rating on the stock. This revision follows Kuraray's robust first-quarter performance and the announcement of a significant share buyback program.
Kuraray's operating profits for the first quarter outperformed Goldman Sachs' optimistic projections, prompting the firm to adjust their earnings estimates for the company. The financial institution now anticipates higher operating profits for the fiscal years 2024 through 2026, estimating increases of 4%, 4%, and 5% respectively.
The positive adjustment also takes into account a share repurchase plan unveiled by Kuraray. The company intends to buy back up to JPY20 billion worth of its shares, which equates to approximately 15 million shares or 4.48% of its outstanding shares excluding treasury stock. This move is likely to benefit shareholders and reflects the company's confidence in its financial health.
In addition to the earnings and buyback announcement, Kuraray is expected to present its strategy for Calgon Carbon in response to stricter PFAS (per- and polyfluoroalkyl substances) regulations at an upcoming business briefing on June 21. Goldman Sachs anticipates that this presentation could act as a further positive catalyst for the company's stock.
Investors and market watchers will be paying close attention to the upcoming business briefing, which could provide additional insights into Kuraray's future plans and impact on its stock performance.
InvestingPro Insights
As Goldman Sachs revises its outlook on Kuraray Co., Ltd., real-time data from InvestingPro underscores the company's strong financial position and potential for investor returns. With a market capitalization of $3.83 billion and a P/E ratio that has been adjusted to 10.73 for the last twelve months as of Q1 2024, Kuraray presents a compelling valuation. This is further supported by a PEG ratio of 0.89, indicating that the stock may be undervalued relative to its earnings growth.
InvestingPro Tips highlight Kuraray's high shareholder yield and its trading at a low P/E ratio relative to near-term earnings growth. Moreover, the company has a strong free cash flow yield, which is a positive indicator of financial health and efficiency. These tips, along with more available on InvestingPro, provide valuable insights for investors considering Kuraray's stock. For those interested in a deeper dive into Kuraray's financials and further tips, consider using the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
Furthermore, the company's recent price performance has been robust, with a 17.63% return over the last three months and a notable 24.97% return over the past year. Trading near its 52-week high, Kuraray's stock seems to be maintaining a positive trajectory, which could be of interest to both current and prospective shareholders. With 11 additional InvestingPro Tips available, investors can gain a more comprehensive understanding of the company's prospects.
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