On Friday, BofA Securities revised its stance on shares of Hitachi Construction Machinery Co (OTC:HTCMY) Ltd (6305:JP) (OTC: HTCMY), downgrading the stock from Neutral to Underperform. Accompanying this downgrade, the firm also reduced its price target from ¥3,300 to ¥3,000. The adjustment in the price objective reflects a strategic shift in the valuation method used by the firm.
The decision to downgrade the stock rating was based on a change in the earnings estimates for the company, particularly in the North American market. The firm's analyst decided to alter the approach for determining the price objective (PO), now focusing solely on the fiscal year ending March 2026 (FY3/26) rather than averaging the estimates for FY3/25 and FY3/26.
Despite maintaining the same enterprise value to earnings before interest and taxes (EV/EBIT) multiple of 7x, the lower FY3/26 estimates for North America prompted the analyst to adjust the price target downwards. This revision indicates a more conservative outlook on Hitachi (OTC:HTHIY) Construction Machinery's performance in the coming years.
The new stock price target of ¥3,000 represents a decrease from the previous target of ¥3,300, signifying a more cautious perspective on the company's future earnings potential. The analyst's comments specifically highlighted the reduced earnings forecast for the North American sector as the key driver for the revision.
Investors and market watchers will be observing the impact of this downgrade on the company's stock performance in the Tokyo and over-the-counter markets, where Hitachi Construction Machinery is traded. The firm's revised outlook may influence the investment community's expectations regarding the company's financial health and market position in the near term.
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