On Friday, Jefferies made a revision to its price target for Pigeon Corp (7956:JP), a leading manufacturer of baby care products. The new target is set at JPY1,400.00, decreased from the previous JPY1,500.00. Despite the reduction, the firm maintained its Hold rating on the stock.
Pigeon's baby bottles, which are noted for their high profit margins, represent a significant 35% of global sales. The company's business model is also recognized for not requiring substantial capital investment, which could be an advantage in the sector.
Jefferies points out that Pigeon is likely to remain a preferred choice within its industry, partly due to its attractive dividend yield, which stands at 5%. This yield is considered substantial, potentially appealing to income-focused investors.
Looking into the future, Jefferies anticipates a modest rise in both sales and profit for Pigeon Corp in the fiscal year 2025. This outlook is based on the current market conditions, which include the absence of additional price increases in Japan following initial hikes. Additionally, the company is expected to face a higher year-over-year comparison for its sales in China.
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