Goldman Sachs Adjusts Obic Co Ltd. (4684:JP) Rating to Neutral Despite Price Target Increase
In a surprising move, financial giant Goldman Sachs has downgraded its rating on Obic Co Ltd. (4684:JP) (OTC: OBIIF) from Buy to Neutral. This decision comes after a thorough analysis of the company's first-quarter results for the fiscal year ending March 2025, leading to a slight adjustment in operating profit forecasts for FY3/25 and FY3/26. The expected decrease in profits, by -0.5% and -0.3% respectively, is mainly attributed to unexpected software procurement expenses in the system support services sector.
However, there is a silver lining for Obic as Goldman Sachs has expressed a more positive medium-term outlook for the company due to increased demand from large enterprises. This optimistic view has led to an upward revision of the price target to JPY25,600.00, up from the previous JPY23,000.00. Additionally, a reduced weighted average cost of capital (WACC) and a decline in the beta coefficient have contributed to this revised target.
Despite the higher price target, Goldman Sachs has shifted its recommendation to Neutral, citing that the current share price already reflects most of the potential gains, which could limit further upside for investors.
In conclusion, investors should take note of Goldman Sachs' updated stance on Obic Co Ltd. while considering their own investment strategies. It is crucial to weigh the potential risks and rewards associated with this stock before making any decisions.
