On Tuesday, Jefferies updated its financial outlook for Kakaku.com Inc. (2371:JP) (OTC: KKKUF), raising the price target to JPY 2,350 from the previous JPY 2,035. The firm maintained a Buy rating on the stock. The adjustment reflects updated earnings estimates based on the company's fiscal year guidance and projections for the future.
The analyst from Jefferies anticipates a consistent fiscal year for Kakaku.com's Tabelog and Kyujin Box (NYSE:BOX) segments. For the Kakaku segment, the Service sub-segment is expected to offset weaker sales trends in Shopping. Although the Service segment is predicted to experience stable growth, the overall performance depends on the Shopping segment's results.
Following discussions with Kakaku.com's Investor Relations and President after the earnings report, the analyst suggests that a recovery in the Shopping segment may be gradual, likely in the second half of the current fiscal year.
The sales decline is believed to be reaching a plateau. The company might need to shift its focus and reallocate resources to categories that are attracting traffic, as PC and laptop sales continue to struggle.
The analyst notes that the top-100 categories are responsible for 90% of Kakaku.com's sales. For the fiscal year ending March 2025, a slight sales decrease of 0.6% year-over-year is forecasted.
On the other hand, the Service segment has made a significant recovery, with an expected sales increase of 11.6% year-over-year for the current fiscal year. This positive trend in the Service segment is a key factor in the raised price target for Kakaku.com's shares.
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