SHIFT (3697) AI Stock Analysis

• Market Cap: ¥181.20B
• Dividend Yield: N/A
• Average Volume (3M): 6.44M
• Price to Earnings (P/E): 20.4
• Beta (1Y): 1.08
• Revenue Growth: 17.35%
• EPS Growth: 74.71%
• Country: JP
• Employees: 10,266
• Sector: Technology
• Sector Strength: 88
• Industry: Software - Application
• EPS (TTM): 6.82
• Shares Outstanding: 267,500,670
• 10 Day Avg. Volume: 7,177,050
• 30 Day Avg. Volume: 6,442,629
• PEG Ratio: 0.58
• Price to Book (P/B): 9.47
• Price to Sales (P/S): 2.99
• P/FCF Ratio: 27.41
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: N/A
• Price Target Upside: N/A
• Rating Consensus: N/A
• Number of Analyst Covering: 0
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 65 Neutral
• Price Target: ¥787.00 ▼(-19.86% Downside)

The score is driven primarily by strong financial performance (solid growth, low leverage, high ROE, and very strong free cash flow generation). This is materially offset by weak technical conditions, with the stock trading below key moving averages and negative momentum indicators. Valuation is moderate-to-high at a 26.2 P/E, with no dividend yield provided to bolster the valuation case.

Positive Factors

Free cash flow strength

Very strong FCF growth (306% reported) indicates durable cash conversion from operations. That level of cash generation supports long-term reinvestment in product R&D, M&A optionality, working capital needs, and capital returns without depending on external financing, enhancing financial resilience.

Low leverage and high ROE

A low debt-to-equity ratio with a high ROE implies efficient use of equity and conservative leverage. This balance provides financial flexibility to fund growth initiatives and absorb cyclical shocks while delivering attractive returns on shareholder capital over the medium term.

Consistent revenue growth and margins

Sustained revenue growth and solid gross margins point to competitive product positioning and pricing power. Durable top-line expansion combined with strong gross margins supports scalable operating leverage, enabling margin improvement as fixed costs are absorbed over time.

Negative Factors

Net margin improvement needed

While gross margins are robust, the company’s net margin lags, suggesting operating expenses, SG&A, or amortization compression of profitability. Persistent margin shortfalls reduce free cash conversion per revenue dollar and limit funds available for strategic investment or shareholder returns.

Rising debt needs monitoring

Although current leverage is low, the guidance to monitor rising debt implies a trend risk. Increasing debt over time would erode financial flexibility, raise interest costs, and constrain capital allocation, making the company more vulnerable to rate or cash-flow pressure in adverse cycles.

Mixed revenue mix reduces predictability

A material portion of revenue from one-time licensing and consulting reduces recurring revenue visibility versus pure subscription models. This mix can produce lumpier growth, weaker retention signals, and greater sensitivity to project timing, complicating long-term revenue predictability and planning.

SHIFT Business Overview & Revenue Model

Company Description

SHIFT Inc. provides software quality assurance and testing solutions in Japan. The company offers CAT, a software test management tool. It also provides software consulting services. The company was incorporated in 2005 and is headquartered in Tokyo, Japan.

How the Company Makes Money

SHIFT generates revenue primarily through the sale of its software solutions, which are offered via subscription-based models and one-time licensing fees. The company also earns income from consulting services, where it assists organizations in implementing and optimizing its software products. Additional revenue streams include maintenance and support services, which ensure ongoing customer satisfaction and retention. SHIFT has established strategic partnerships with key industry players, enhancing its market reach and credibility, further contributing to its financial success.

SHIFT Financial Statement Overview

Summary

Strong overall fundamentals supported by solid income statement performance (revenue growth and robust gross margin), healthy balance sheet (low leverage with 0.29 debt-to-equity and strong 21.77% ROE), and very strong cash generation (free cash flow growth of 306.37%). Profitability at the net margin level still has room to improve.

Income Statement

SHIFT has demonstrated strong revenue growth with a consistent upward trajectory over the years, highlighted by a 3.94% growth in the latest year. The gross profit margin has remained robust, indicating effective cost management. However, the net profit margin, while improving, suggests room for further enhancement in profitability. Overall, the company exhibits solid performance with potential for increased efficiency.

Balance Sheet

The balance sheet reflects a healthy financial position with a manageable debt-to-equity ratio of 0.29, indicating low leverage. The return on equity is strong at 21.77%, showcasing effective utilization of shareholder funds. The equity ratio is stable, suggesting a balanced asset structure. While the company maintains a solid foundation, monitoring debt levels as they increase is advisable.

Cash Flow

SHIFT's cash flow statement highlights impressive free cash flow growth of 306.37%, indicating strong cash generation capabilities. The operating cash flow to net income ratio is healthy, reflecting efficient cash management. The free cash flow to net income ratio is also strong, underscoring the company's ability to convert earnings into cash. Continued focus on sustaining cash flow growth will be beneficial.

Breakdown	TTM	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	124.90B	129.82B	110.63B	88.03B	64.87B	46.00B
Gross Profit	42.69B	45.02B	35.36B	29.94B	20.21B	13.15B
EBITDA	16.69B	17.03B	11.98B	11.89B	8.93B	5.81B
Net Income	8.12B	8.94B	5.13B	6.25B	4.97B	2.82B
Balance Sheet
Total Assets	77.83B	77.00B	62.72B	49.53B	40.23B	34.27B
Cash, Cash Equivalents and Short-Term Investments	27.47B	23.73B	20.87B	17.59B	12.92B	14.25B
Total Debt	18.61B	12.04B	9.58B	4.90B	3.53B	4.22B
Total Liabilities	39.52B	35.97B	28.20B	19.96B	14.22B	11.59B
Stockholders Equity	38.31B	41.03B	34.04B	29.12B	25.65B	22.40B
Cash Flow
Free Cash Flow	3.49B	14.17B	3.44B	8.99B	6.62B	4.32B
Operating Cash Flow	4.04B	15.65B	9.09B	10.25B	7.39B	4.76B
Investing Cash Flow	-1.47B	-11.70B	-9.95B	-3.80B	-5.61B	-5.43B
Financing Cash Flow	1.48B	-1.19B	4.15B	-1.80B	-3.08B	8.29B

SHIFT Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 982.00
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Positive
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:3697, the sentiment is Negative. The current price of 982 is above the 20-day moving average (MA) of 838.61, above the 50-day MA of 914.45, and below the 200-day MA of 1306.93, indicating a bearish trend. The MACD of -61.65 indicates Positive momentum. The RSI at 24.17 is Positive, neither overbought nor oversold. The STOCH value of 8.30 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for JP:3697.

SHIFT Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
9759	77 Outperform	¥227.43B	19.92	―	2.49%	9.10%	14.67%
4443	68 Neutral	¥155.74B	75.37	―	―	27.65%	96.11%
3697	65 Neutral	¥181.20B	20.38	24.24%	―	17.35%	74.71%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
3994	58 Neutral	¥185.73B	116.28	-19.16%	―	19.57%	-16.67%
4478	55 Neutral	¥135.74B	99.06	―	―	31.57%	―
4776	―	¥98.09B	16.72	―	1.02%	26.47%	142.77%

SHIFT Corporate Events

SHIFT Finalizes Terms for 10th Series of Employee Share Options

SHIFT Inc. has finalized the terms for its 10th series of paid share options to be granted to employees, following a prior board resolution in mid-January. The company will allocate 10,000 share option rights to 36 employees, with the options corresponding to a total of 1,000,000 shares of common stock, reinforcing its use of equity-based incentives to align staff interests with long‑term corporate performance.

The most recent analyst rating on (JP:3697) stock is a Hold with a Yen787.00 price target. To see the full list of analyst forecasts on SHIFT stock, see the JP:3697 Stock Forecast page.

SHIFT Completes ¥6.5 Billion Share Buyback, Repurchasing 3% of Outstanding Stock

SHIFT Inc. has completed a share repurchase program authorized by its board on January 14, 2026, buying back 7.9 million shares of common stock on the Tokyo Stock Exchange between January 19 and January 27, 2026, for a total of approximately ¥6.55 billion. The buyback, which reached the full share volume authorized (3.0% of outstanding shares excluding treasury stock) but remained below the maximum monetary cap, signals a capital allocation move that may enhance shareholder value through reduced share float and underscores management’s active use of treasury share repurchases as a financial and governance tool.

The most recent analyst rating on (JP:3697) stock is a Hold with a Yen937.00 price target. To see the full list of analyst forecasts on SHIFT stock, see the JP:3697 Stock Forecast page.

SHIFT Issues Performance-Linked Employee Stock Options to Support SHIFT3000 Growth Plan

SHIFT Inc. has approved the issuance of its 10th series of paid share options to 37 employees, designed as an incentive scheme to boost motivation, strengthen organizational cohesion, and accelerate growth while aligning staff interests with those of shareholders. The options, which could dilute existing shares by about 0.4% if fully exercised, feature an exercise price structure tied to the company’s performance, notably a consolidated adjusted operating profit target of ¥40 billion for the fiscal year ending August 2029, positioned as a milestone toward its broader “SHIFT3000” goals of ¥300 billion in sales and ¥65 billion in adjusted operating profit; management argues the structure is not on favorable terms, is priced at fair value, and that the potential dilution is reasonable given the expected enhancement of corporate and shareholder value.

The most recent analyst rating on (JP:3697) stock is a Hold with a Yen1006.00 price target. To see the full list of analyst forecasts on SHIFT stock, see the JP:3697 Stock Forecast page.

SHIFT Restructures DX Consulting Subsidiaries Around CIMTECH to Drive Synergies and Growth

SHIFT Inc. has approved a group-wide organizational restructuring that will transfer all shares of its subsidiary Airitech Inc. to Stride Digital Group Inc. via an absorption-type company split, followed by the absorption-type merger of Airitech and madere Inc. into CIMTECH Inc., which will later adopt a new corporate name. By consolidating Airitech and madere under SDG’s stronger business base and then integrating them into CIMTECH, SHIFT aims to build a larger, more technically diverse engineering organization, expand orders from existing and new customers, strengthen recruitment of high-caliber talent, and improve project quality and efficiency through integrated management and standardized knowledge, ultimately pursuing multifaceted synergies and higher corporate value in its DX consulting and related services.

The most recent analyst rating on (JP:3697) stock is a Hold with a Yen1006.00 price target. To see the full list of analyst forecasts on SHIFT stock, see the JP:3697 Stock Forecast page.

SHIFT Launches ¥10 Billion Share Buyback, Citing Undervalued Stock and Strategic Capital Shift

SHIFT Inc. has resolved to repurchase up to 7.9 million of its own shares, representing about 3% of its outstanding stock (excluding treasury shares), for a maximum total of ¥10 billion between January 19 and March 31, 2026. Management views the current share price as significantly undervalued relative to its expectations and considers this buyback a more attractive and certain use of capital than pursuing additional M&A at this time, framing the move as a strategic growth investment; the company also does not intend to cancel the repurchased shares, suggesting potential future use for capital strategy or transactions while aiming to enhance shareholder value and signal confidence in its long-term growth trajectory.

The most recent analyst rating on (JP:3697) stock is a Hold with a Yen1006.00 price target. To see the full list of analyst forecasts on SHIFT stock, see the JP:3697 Stock Forecast page.

SHIFT to Acquire Nisseicom to Expand Mid-Sized Enterprise and Health Insurance IT Business

SHIFT Inc., through its consolidated subsidiary SHIFT Growth Capital Inc., has agreed to acquire all shares of Nisseicom, Limited from Nissei Holdings via a multi-step transaction that will make Nisseicom a consolidated subsidiary. Nisseicom is a prime vendor for mid-sized enterprises, providing business application packages, system development, maintenance and operations, with strong positions in industrial and distribution sectors as well as specialized solutions for national and public universities and health insurance societies. The deal is intended to broaden SHIFT’s customer base in the health insurance domain and regional markets outside Greater Tokyo, deepen its presence among mid-sized enterprises, and generate upselling and cross-selling opportunities by combining Nisseicom’s development capabilities with SHIFT’s software testing and related services. By improving operational efficiency and profitability at Nisseicom and integrating its offerings, SHIFT aims to reinforce its growth trajectory and enhance medium- to long-term corporate value for the group and its stakeholders.

The most recent analyst rating on (JP:3697) stock is a Hold with a Yen1006.00 price target. To see the full list of analyst forecasts on SHIFT stock, see the JP:3697 Stock Forecast page.

SHIFT Posts Strong Revenue Growth but Lower Profit, Affirms Full-Year 2026 Guidance

SHIFT reported consolidated net sales of ¥34.8 billion for the three months ended November 30, 2025, up 15.5% year on year, but operating profit declined 19.9% to ¥2.8 billion and profit attributable to owners of parent fell 9.2% to ¥1.8 billion, with basic earnings per share slipping to ¥6.82. Despite the pressure on profitability, total assets and shareholders’ equity increased, the equity ratio improved to 53.5%, dividends remain at zero for the current and forecast fiscal year, and the company reaffirmed its full-year 2026 guidance, targeting ¥150.0 billion in net sales and ¥20.0 billion in adjusted operating and ordinary profit, underscoring its focus on adjusted earnings metrics that strip out M&A-related amortization and expenses.

The most recent analyst rating on (JP:3697) stock is a Hold with a Yen1006.00 price target. To see the full list of analyst forecasts on SHIFT stock, see the JP:3697 Stock Forecast page.

SHIFT completes ¥108 million treasury share disposal for director RSU compensation

SHIFT Inc. has completed the allotment procedures for the disposal of its treasury shares under a restricted stock unit plan approved by its board in late November 2025. The company issued 106,995 shares of common stock to seven directors as compensation, valuing the shares at ¥1,013.5 each—the previous trading day’s closing price—resulting in a total disposal value of approximately ¥108.4 million, a move that underscores its ongoing use of stock-based pay to tie director compensation more closely to company performance and shareholder value.

The most recent analyst rating on (JP:3697) stock is a Hold with a Yen992.00 price target. To see the full list of analyst forecasts on SHIFT stock, see the JP:3697 Stock Forecast page.

SHIFT to Absorb ERP Consulting Subsidiary ADX to Accelerate Growth and Advance SHIFT3000 Target

SHIFT Inc. has resolved to absorb its wholly owned subsidiary ADX Consulting Inc. through an absorption-type merger effective March 1, 2026, with SHIFT as the surviving entity and ADX dissolved. ADX, originally established as a joint venture in 2020 and fully acquired by SHIFT in 2023, specializes in ERP planning, requirements definition and upstream consulting, which strategically complement SHIFT’s existing ERP services. By fully integrating ADX without issuing new shares or other consideration, SHIFT aims to strengthen collaboration in ERP consulting, accelerate business growth and support its medium-term target of achieving ¥300 billion in net sales under the “SHIFT3000” initiative, potentially enhancing operational efficiency and reinforcing its competitiveness in enterprise digital transformation services.

The most recent analyst rating on (JP:3697) stock is a Hold with a Yen992.00 price target. To see the full list of analyst forecasts on SHIFT stock, see the JP:3697 Stock Forecast page.

SHIFT Subsidiary ALH to Absorb Regional Units in Osaka and Sendai

SHIFT Inc. announced that its wholly owned subsidiary ALH Inc. will conduct an absorption-type merger of two of its regional subsidiaries, Osaka-based Crebnet Corporation and Sendai-based dataway. systems co., ltd., with ALH as the surviving entity. The restructuring is intended to expand ALH’s operational footprint in Osaka and fully launch its Sendai operations, while integrating back-office functions, standardizing business processes, and cutting costs to better utilize management resources; the merger, scheduled to take effect on March 2, 2026, involves no new share issuance or other consideration and will not alter ALH’s core corporate profile, but is expected to streamline regional operations within the SHIFT group.

The most recent analyst rating on (JP:3697) stock is a Hold with a Yen992.00 price target. To see the full list of analyst forecasts on SHIFT stock, see the JP:3697 Stock Forecast page.

SHIFT Inc. Postpones Merger Effective Date with Subsidiary

SHIFT Inc. has announced a delay in the effective date of the absorption-type merger with its subsidiary, Roppongi Kanri No. 10 Co., Ltd., due to longer-than-expected prerequisite procedures. The merger’s new effective date is now scheduled for February 1, 2026, instead of the initially planned January 1, 2026. The company anticipates that this change will have an immaterial impact on its consolidated financial results, but it remains committed to promptly disclosing any significant changes in business conditions that may arise.

The most recent analyst rating on (JP:3697) stock is a Hold with a Yen992.00 price target. To see the full list of analyst forecasts on SHIFT stock, see the JP:3697 Stock Forecast page.

SHIFT Inc. Expands Insurance Sector Presence with Strategic Acquisition

SHIFT Inc. has announced that its subsidiary, SHIFT Growth Capital Inc., will acquire all shares of a newly established company formed by ESCCO Japan Co., Ltd. This acquisition aims to enhance SHIFT’s presence in the insurance sector by leveraging ESCCO Japan’s expertise in system development for the insurance industry. The move is expected to strengthen SHIFT’s collaboration with HOPES Corporation, expand its customer base, and increase project scale, thereby accelerating growth and enhancing service offerings.

The most recent analyst rating on (JP:3697) stock is a Hold with a Yen992.00 price target. To see the full list of analyst forecasts on SHIFT stock, see the JP:3697 Stock Forecast page.

SHIFT Inc. Announces Disposal of Treasury Shares to Drive Growth

SHIFT Inc. announced the disposal of 106,995 treasury shares under its Restricted Stock Unit plan, aimed at incentivizing directors to drive sustainable growth and align with shareholder interests. This move, approved by the Board of Directors, highlights the company’s commitment to corporate value enhancement and aligns with previously set compensation limits for directors.

The most recent analyst rating on (JP:3697) stock is a Buy with a Yen1800.00 price target. To see the full list of analyst forecasts on SHIFT stock, see the JP:3697 Stock Forecast page.

SHIFT Inc. Merges with Subsidiary to Enhance Training Programs and Address IT Talent Shortage

SHIFT Inc. has announced an absorption-type merger with its wholly-owned subsidiary, Roppongi Kanri No.10 Co., Ltd. (RK10), to enhance collaboration and streamline operations. This strategic move aims to integrate RK10’s successful online programming school with SHIFT’s existing training programs, thereby expanding its engineer training capabilities and addressing the IT industry’s talent shortage. The merger will enable SHIFT to offer enhanced e-learning content to corporate clients, focusing on compliance, information security, and other essential workplace standards, ultimately supporting smoother business operations across Japan.

The most recent analyst rating on (JP:3697) stock is a Buy with a Yen1800.00 price target. To see the full list of analyst forecasts on SHIFT stock, see the JP:3697 Stock Forecast page.