On Friday, Morgan Stanley (NYSE:MS) adjusted its stance on Takeuchi Mfg. Co., Ltd (6432:JP) (OTC: TKUGF) stock, downgrading from Overweight to Equalweight and revising the price target to JPY4,900 from JPY8,300.
The firm's analyst cited a projection of healthy earnings for fiscal year 2025 due to the company's substantial order backlog and the favorable impact of yen depreciation. However, the analyst expressed caution about the company's profit growth guidance already being factored into the current stock price.
The downgrade reflects an expectation that earnings may decline in fiscal year 2026. This anticipated drop is attributed to a normalization of the order backlog and potentially weaker orders unless there is a strong rebound in end markets. The firm's outlook for the company's performance over the next 12 to 18 months has led to the decision to lower the rating.
The analyst's comments emphasize that while Takeuchi Mfg. is likely to experience continued robust earnings in the near term, the market has already accounted for this in the stock's valuation. The firm's revised price target and rating are based on the anticipated earnings trajectory and market conditions that could affect the company's performance after the next fiscal year.
Morgan Stanley's reassessment of Takeuchi Mfg. comes as the company navigates the complexities of market demand and supply chain dynamics. The firm's new Equalweight rating suggests that the analyst believes the stock is now fairly valued based on the projected earnings and market trends.
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