On Tuesday, Panasonic (OTC:PCRFY) Corp's (6752:JP) (OTC: PCRFY) stock rating was downgraded by Jefferies from "Buy" to "Hold," with a revised price target set to ¥1,360 from the previous ¥1,720. The decision reflects concerns over the company's strategic moves following its exit from the auto components business.
Jefferies has adjusted its outlook on Panasonic due to the company's recent acquisition activities, which the firm views as doubling down on a questionable acquisition strategy.
Jefferies initially believed that Panasonic would benefit from the Tokyo Stock Exchange (TSE) reform by restructuring its business portfolio, particularly after selling its auto components business.
However, the firm's latest acquisition through BY has raised doubts about Panasonic's direction. Jefferies expressed that this move does not align with their expectations of a beneficial restructuring.
The investment firm also cited the uncertain future of the Inflation Reduction Act (IRA) subsidies in the United States as a factor in their reassessment. The subsidies' outlook post the U.S. elections has become a point of concern, leading to a more cautious estimate for Panasonic's performance.
As a result of these factors, Jefferies has lowered its estimates for Panasonic, leading to the cut in the price target to ¥1,360. The downgrade to "Hold" suggests a neutral stance, indicating that Jefferies no longer recommends purchasing the stock at this time, but does not advise selling it either.
The revised price target and stock rating reflect Jefferies' current position on Panasonic based on the company's acquisition decisions and the potential impact of policy changes in the U.S. market.
In other recent news, Panasonic Corporation reported a record net profit for fiscal 2024, driven by one-time gains, and expressed optimism about its electric vehicle (EV) battery business.
The company's financial results showed increased sales and profit year-on-year, particularly in the Lifestyle, Automotive, and Connect segments. However, fiscal 2025 projections indicate higher sales and adjusted operating profit but a lower net profit due to the absence of one-time gains.
Citi reaffirmed its confidence in Panasonic, maintaining a Buy rating and a price target of JPY2,000.00. This follows Panasonic's comprehensive business briefing where management discussed its strategy to address recent shortcomings and plans for broad business development.
Other recent developments include Panasonic's plans to focus on the automotive battery business in North America and Japan, with supply agreements with Subaru (OTC:FUJHY) and Mazda.
Despite challenges such as a loss in the Automotive segment and lower-than-expected ROE and cumulative operating profit targets, the company remains optimistic about the long-term growth potential of EV batteries and heat pumps.
These are recent developments that provide insights into Panasonic's strategic direction and its efforts to enhance shareholder value.
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