On Thursday, Fujitsu Limited (6702:JP) (OTC: FJTSY) stock received a positive assessment from Citi, as the firm upgraded the stock from Neutral to Buy. In conjunction with the upgrade, the price target was increased to JPY3,400 from the previous JPY2,800. The upgrade comes on the heels of Fujitsu's strong financial performance, particularly noting the impressive April to June earnings.
The analyst from Citi highlighted that the upgrade was driven by the restructuring efforts Fujitsu has undertaken over the past five years. These efforts have been focused on changing the company's business structure, which has led to growth in margins and Return on Invested Capital (RoIC).
The restructuring also includes modifications to Fujitsu's financial structure, which have contributed to a significant increase in Return on Equity (RoE), rising to 15% from 9% over the past five years.
Fujitsu's commitment to restructuring has not only improved its profit structure but also resulted in shareholder value enhancement through stock buybacks. The analyst anticipates that the company's shareholders' equity will remain stable at nearly JPY1.8 trillion, with an expected RoE of 17% in the fiscal year ending March 2027.
The report concluded with a positive outlook for Fujitsu's financial indicators. Citi's analyst projects that both RoE and RoIC for Fujitsu will continue on an upward trajectory, reinforcing the firm's decision to upgrade the stock and raise the price target.
InvestingPro Insights
Fujitsu Limited's (OTC: FJTSY) commitment to enhancing shareholder value is evident in its consistent financial performance and strategic restructuring efforts. According to InvestingPro data, Fujitsu boasts a market capitalization of $32.06 billion and trades at a P/E ratio of 18.33, which is attractive given its near-term earnings growth. The company's revenue for the last twelve months as of Q1 2025 stands at $23.54 billion, with a growth rate of 2.49%. Additionally, the firm's gross profit margin during the same period is a robust 31.33%, showcasing the efficiency of its operations.
InvestingPro Tips highlight Fujitsu's strong track record, including a significant return over the last week and a high return over the last year, with price total returns of 5.18% and 42.64%, respectively. Furthermore, the company has raised its dividend for 6 consecutive years, demonstrating its ability to generate and return cash to shareholders. With a notable dividend history, Fujitsu has maintained dividend payments for 21 consecutive years, emphasizing its financial stability and commitment to shareholders.
For readers interested in deeper analysis, there are additional InvestingPro Tips available, including Fujitsu's P/E ratio relative to near-term earnings growth, its status as a prominent player in the IT Services industry, and its moderate level of debt. These insights, coupled with the positive assessment from Citi, paint a promising picture for Fujitsu's stock. To explore more tips and detailed metrics, visit InvestingPro.
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