In a report released today, Chikai Tanaka from Goldman Sachs downgraded TIS Inc. to a Hold, with a price target of Yen3,590.00.
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Chikai Tanaka has given his Hold rating due to a combination of factors tied to weaker earnings prospects and valuation. He cut his profit forecasts over the next several years after the company took on public-sector projects that are either loss-making or carry very low margins, with a risk that these problematic contracts could drag on longer than expected, while new order intake in financial and industrial IT has also softened.
At the same time, sector-wide concern about AI-driven disruption has compressed peer valuation multiples, and Tanaka now applies a larger discount to the sector average when valuing TIS, which reduces his target P/E and lowers his target price. With only mid-teens upside to his revised target, slowing earnings momentum, integration costs from the Intec combination running ahead of synergies, and medium-term profit goals likely to be missed, he judges the risk-reward as balanced rather than compelling, justifying a Hold stance.
In another report released on February 14, TipRanks – Google also reiterated a Hold rating on the stock with a Yen3,206.00 price target.