On Friday, Jefferies adjusted its stance on Asahi Intecc Co Ltd. (7747:JP) (OTC: AHICF), shifting the rating from Buy to Hold and reducing the price target from JPY3,400.00 to JPY2,600.00. The firm's analysis suggests that the company's valuations, which peaked in the fiscal year ending June 2018, have been on a downward trajectory and may persist in this trend.
The new price target is based on a target 16x enterprise value to earnings before interest, taxes, depreciation, and amortization (EV/EBITDA) multiple applied to the firm's fiscal year 2026 estimates. This multiple aligns with the current-year average for the local sector, which includes Asahi Intecc.
According to Jefferies, the revised price target indicates a potential downside of 4%. This anticipated decrease in the stock's value has prompted the firm to downgrade its recommendation to Hold, suggesting that investors maintain their current positions without adding more shares.
The downgrade reflects the firm's assessment of Asahi Intecc's performance and valuation trends over the past years. The company's financials have not sustained the peak levels observed in FY6/18, leading to a cautious outlook on the stock's future performance.
Investors and market watchers now have updated guidance from Jefferies regarding Asahi Intecc's stock, taking into account the potential for continued valuation declines and the modest downside risk identified in the firm's analysis.
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