On Wednesday, Morgan Stanley downgraded shares of NS Options Company (2327:JP) (OTC: NSSXF) from Equalweight to Underweight, whereas concurrently elevating the worth goal to JPY3,000.00 from the earlier JPY2,300.00.
The downgrade comes regardless of the corporate reporting a strong 39% year-over-year enhance in orders, together with vital authorities contracts and license gross sales to monetary establishments.
NS Options introduced an improved working revenue outlook, rising its forecast for the fiscal 12 months ending March 2025 by JPY1.0 billion. This revision is attributed to financial savings on provisions for bonus funds.
Nonetheless, Morgan Stanley anticipates that the corporate will additional increase its steerage in the course of the second-quarter outcomes however believes that this potential enhance is already mirrored within the present inventory value.
The agency’s valuation is taken into account to be stretched, particularly after the revelation on August 26 that an activist investor had acquired a significant stake in NS Options, inflicting a pointy rise within the inventory’s worth. Morgan Stanley means that traders scale back their holdings within the firm.
Nonetheless, the agency acknowledges that there are upside dangers, together with the chance that the activist investor’s actions may result in a rise within the inventory value.
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