On Thursday, Kusuri no Aoki Holdings Co Ltd (3549:JP) received an upgrade in its stock rating by UBS from Neutral to Buy, accompanied by a rise in the price target to JPY3,850.00, up from the previous JPY3,280.00. The adjustment reflects a more optimistic outlook from the firm regarding the company's financial performance in the coming years.
The upgrade by UBS is based on the anticipation that Kusuri no Aoki will benefit from the industry's shift caused by higher minimum wage levels, which is expected to phase out less profitable competitors. This market dynamic is seen as a catalyst for creating medium-term business opportunities for the company.
UBS has also revised its earnings forecasts for Kusuri no Aoki, increasing its operating profit prediction for the fiscal year ending May 2026 by 1%, and for the fiscal year ending May 2029 by 11%. These revisions take into account the company's current fiscal progress and the potential impacts of the evolving competitive landscape.
The new price target of JPY3,850 represents a significant potential upside from the previous target, justifying the change in the stock's rating to Buy. The firm's analysts believe that the adjusted forecasts and the progression of the fiscal year warrant a more bullish stance on Kusuri no Aoki's shares.
The upgraded rating and increased price target suggest that UBS sees a stronger investment case for Kusuri no Aoki, with the expectation that the company will capitalize on the forthcoming business opportunities as the market adjusts to higher wage standards.
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