Goldman Sachs Upgrades Trend Micro Stock: What You Need to Know
In a recent development, Goldman Sachs has upgraded its rating on Trend Micro Incorporated (4704:JP) (OTC: TMICY) from Sell to Neutral. The investment firm also raised the price target for the stock to ¥8,500, up from ¥6,200 previously. This adjustment follows the release of Trend Micro's second-quarter results for the fiscal year ending December 2024, which led to a reassessment of earnings estimates.
According to the firm's analyst, the revision of Trend Micro's operating profit forecasts for the fiscal years 2024 through 2026 played a significant role in the rating upgrade. While the operating profit forecast for 2024 remains steady at 0%, there is a slight improvement projected for the subsequent years, with a 2% and 3% increase, respectively. This adjustment reflects Trend Micro's effective cost control measures, particularly in areas such as cloud services, marketing, and outsourcing.
Despite weaker sales estimates due to sluggish order trends in Europe, Goldman Sachs raised the target price for Trend Micro shares. The increase in the price target is supported by the upward revision of earnings estimates and other undisclosed factors. However, the new price target indicates limited upside potential for the stock.
The decision to upgrade Trend Micro to a Neutral rating comes after evaluating the stock's performance since it was added to Goldman Sachs' Sell list in August 2022. During this period, the stock saw a marginal decline of 0.8%, while the index gained 37.0%. This translates to an underperformance relative to the TOPIX by 37.8% over the same timeframe.
In conclusion, the upgrade in rating and price target for Trend Micro by Goldman Sachs highlights the company's improved financial outlook and cost management strategies. Investors should consider these factors when making investment decisions, keeping in mind the limited upside potential indicated by the new price target. It is essential to stay informed about such developments in the financial markets to make informed investment choices.
