On Thursday, UBS has adjusted its outlook for Sysmex Corporation (6869:JP) (OTC: SSMXY), lowering the price target to JPY2,700 from the previous JPY2,960. Despite this change, the firm maintains a Neutral rating on the stock. The revision reflects updates to earnings forecasts.
According to UBS, the anticipated increase in operating profit (OP) of over 10% year-over-year in fiscal years ending March 2025 and 2026 should be driven by several factors. These include the positive impact of yen depreciation, the start of localized production of instruments in China, and the initiation of direct sales in the hemostasis business within European and US markets starting from fiscal year 2025.
Moreover, the analyst points out that the medium-term year-over-year growth in operating profit is projected to be in the high single digits. This expectation is due to the maturing hematology market, which accounted for 59% of the company's sales in the fiscal year ending March 2024. The maturation of this segment suggests limited potential for substantial growth in the medium term.
The report also indicates that Sysmex's near-term earnings are expected to align with the consensus of the Investment Forum for Investor Services (IFIS). Furthermore, the analyst notes a lack of significant catalysts that could drive the share price upwards in the near future, indicating a potentially stable but uneventful outlook for the company's stock performance.
InvestingPro Insights
As investors digest UBS's revised outlook for Sysmex Corporation, real-time data from InvestingPro provides additional context to the company's financial health and market performance. With a market capitalization of $10.8 billion and a P/E ratio of 11.38, Sysmex appears to be trading at a low price-to-earnings ratio relative to its near-term earnings growth.
The company's revenue has shown a healthy increase over the last twelve months as of Q4 2024, with a growth of 12.43%, and an even more impressive quarterly revenue growth of 20.78% in Q4 2024. These figures underscore the company's solid financial performance and its ability to generate profits, as evidenced by a gross profit margin of 52.54%.
InvestingPro Tips highlight that Sysmex has raised its dividend for 4 consecutive years and has maintained dividend payments for 29 consecutive years, signaling a commitment to shareholder returns. Moreover, the company is noted for operating with a moderate level of debt and having liquid assets that exceed short-term obligations. These factors, combined with a position as a prominent player in the Healthcare Equipment & Supplies industry, may provide reassurance to investors looking for stability and steady growth.
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