On Thursday, analyst firm Macquarie raised its rating on shares of Minebea Mitsumi Inc. (6479:JP) (OTC: MNBEY) from Neutral to Outperform, while also increasing the price target to JPY3,700 from JPY2,500. The firm cited a positive outlook on the company's hard disk drive (HDD)-related business despite broader market uncertainties.
Macquarie noted that while there are short-term uncertainties affecting Minebea Mitsumi's business performance, such as exchange rate fluctuations and demand changes in the automobile and smartphone industries, the company's HDD segment is expected to maintain strength. Minebea Mitsumi is involved in the manufacturing of components for HDDs, such as motors, pivot assemblies, and ball bearings, which are known to carry high profit margins.
The firm's analysis suggests that the HDD-related businesses could account for approximately 10-15% of Minebea Mitsumi's consolidated operating profit. This segment's stability is a key factor in the upgraded rating and increased price target, indicating a confidence in the company's profitability amidst challenging macroeconomic conditions in the US and China.
The new price target of JPY3,700 represents a significant increase from the previous target of JPY2,500, reflecting Macquarie's revised expectations for the company's financial performance. Minebea Mitsumi's stock is now anticipated to outperform in the market, as per Macquarie's assessment.
Investors and market watchers will be looking closely at how Minebea Mitsumi navigates the forecasted uncertainties and capitalizes on the robustness of its HDD-related operations in the face of fluctuating global economic conditions.
In other recent news, Minebea Mitsumi has experienced adjustments to its stock target by investment firms CLSA and Jefferies. CLSA lowered its price target for Minebea Mitsumi to JPY3,900 from JPY4,600, while maintaining an Outperform rating.
The firm cited downward revisions in auto-sales forecasts and a stronger Japanese yen as contributing factors. Despite this, CLSA continues to show confidence in the company, adjusting its forecast for the company's operating profit for fiscal years 2025 to 2027 to align with consensus estimates.
Simultaneously, Jefferies raised its price target for Minebea Mitsumi to ¥4,600, while maintaining a Buy rating. This adjustment reflects the firm's positive outlook based on the weak yen and improved market conditions, which are expected to boost the company's earnings beyond its fiscal year March 2025 guidance. Jefferies analysts project earnings to surpass the guidance for FY3/25, supported by current currency trends and the general market environment.
These recent developments highlight both firms' belief in Minebea Mitsumi's potential for growth and profitability. CLSA and Jefferies anticipate steady growth in specific segments of Minebea Mitsumi's operations, contributing to the company's financial performance in the coming years.
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