On Monday, Goldman Sachs adjusted its stance on Trend Micro (OTC:) Incorporated (4704:JP) (OTC: TMICY), shifting from a Sell to a Neutral rating, and increased the price target to ¥8,500, up from the previous ¥6,200. This change follows the company’s second-quarter results for the fiscal year ending December 2024, which prompted a reevaluation of earnings estimates.
The firm’s analyst cited a revision of Trend Micro’s operating profit forecasts for the fiscal years 2024 through 2026, with expectations set at a consistent 0% for 2024 but showing a slight improvement in the subsequent years, with a 2% and 3% increase respectively. This adjustment reflects the company’s ability to control costs more effectively than anticipated, particularly in areas such as cloud services, marketing, and outsourcing.
Despite lowering sales estimates due to weaker order trends in Europe, Goldman Sachs raised the target price for Trend Micro shares. This increase is based on the upward revision of earnings estimates and additional factors not detailed in the context. The new price target suggests there is limited upside potential for the stock.
The upgrade to Neutral comes after Trend Micro’s stock performance was assessed since it was added to Goldman Sachs’ Sell list on August 26, 2022. Since then, the stock has seen a marginal decline of 0.8%, in contrast to the index, which gained 37.0%. This represents an underperformance relative to the TOPIX by 37.8% over the same timeframe.
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