Citi has issued a downgrade for MonotaRO Co Ltd (3064: JP) from Neutral to Sell, adjusting the price target to ¥1,800 from the previous ¥1,850.
This move reflects a reassessment of the company's valuation against its expected revenue growth rate.
The revision by Citi comes after a thorough analysis of MonotaRO's monthly trends and financial outlook. Despite maintaining the valuation base year of FY12/25 and a target price-to-earnings ratio (PER) of 30 times, the firm has reduced its price target, indicating a more cautious view on the stock's future performance.
Citi's evaluation suggests that MonotaRO's current valuations appear overstretched when weighed against the anticipated pace of revenue growth. This perspective takes into account the company's recent quarterly results briefing and the announcement of its end-of-period plan.
The assessment also anticipates a potential decline in the stock's relative preference rankings among investors. Citi notes that there could be renewed concerns about MonotaRO's earnings outlook, which might drive the share price down in the near term.
In conclusion, Citi's downgrade to Sell reflects a tempered expectation for MonotaRO's stock performance, with a lowered price target implying a cautious stance on the company's valuation in the face of possible earnings headwinds and investor sentiment shifts.
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