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Trend Micro stock premium intact as Jefferies notes focus on client expansion

EditorEmilio Ghigini
Published 12/12/2024, 02:59 AM
TMICY
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On Thursday, Jefferies, a global investment banking firm, increased its price target for Trend Micro (OTC:TMICY) Incorporated (4704:JP) (OTC: TMICY) stock, a global cybersecurity company, to ¥8,000 from the previous ¥7,800. The firm retained a Hold rating. The adjustment comes amid expectations for modest operating profit margin (OPM) improvements in the fiscal year 2025.

The analyst from Jefferies forecasts that to achieve a 30% OPM by the fiscal year ending December 2027, Trend Micro will need to not only enhance sales growth but also intensify its focus on cross-selling additional modules to its existing large clients. Concurrently, the company plans to pursue new clients, particularly by expanding its sales team in the United States during the fiscal year 2025.

According to the analyst, the trajectory toward improved operating profit margins is not expected to be consistent. This outlook has prompted a slight increase in the price target, which now values Trend Micro at a price-to-earnings (P/E) ratio of 27.1 times based on the projected earnings per share (EPS) of ¥295.6 for the fiscal year 2025. This valuation places Trend Micro at a premium compared to other companies within the IT service sector.

Trend Micro's strategic focus on both expanding its customer base and enhancing its sales force in the US signifies a dual approach to driving growth. The company's initiatives are aimed at increasing sales and achieving long-term profitability targets.

The updated price target reflects Jefferies' analysis of Trend Micro's financial outlook and its position within the competitive landscape of the IT services industry. The Hold rating indicates that while there may be positive developments, investors are advised to maintain their current position regarding Trend Micro's shares at this time.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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