7731: Earnings Headwinds Will Persist As Guidance Cuts Weigh On Outlook

Narrative Update on Nikon

Analysts have modestly raised their price target on Nikon, reflecting slightly lower growth and margin assumptions that are more than offset by a higher expected future P/E multiple and a marginally reduced discount rate.

What's in the News

• Nikon lowered its full year fiscal 2026 guidance, cutting expected net sales to JPY 680 billion and operating profit to JPY 14 billion, mainly due to weaker Precision Equipment and Digital Manufacturing sales and anticipated U.S. tariff impacts (company guidance).
• The company raised guidance for the first half of fiscal 2025, now forecasting a smaller operating loss of JPY 5 billion and profit attributable to owners of JPY 5 billion, helped by FX tailwinds and earlier than planned gains from transferring semiconductor wafer bonding R&D assets (company guidance).
• Nikon and Healios agreed to terminate their long standing business and capital alliance in regenerative medicine, with both companies choosing to pursue independent strategies, including Healios shifting toward a CDMO model from 2025 (company announcement).
• Nikon reaffirmed commercial availability of its DSP 100 digital lithography system for advanced semiconductor packaging, targeting fast growing panel level packaging demand with maskless, high resolution exposure on large substrates up to 600 x 600 mm (product announcement).
• Nikon and RED DIGITAL CINEMA unveiled the ZR Cinema Camera, a lightweight 6K full frame model combining Nikon Z mount and AI autofocus with REDCODE RAW and cinema centric features, aimed at expanding Nikon's presence in professional video production (product announcement).

Valuation Changes

• Fair Value Estimate remains unchanged at approximately ¥1,546 per share, indicating no revision to the intrinsic value assessment.
• The Discount Rate edged down slightly from 7.46 percent to 7.45 percent, reflecting a marginally lower perceived risk profile.
• Revenue Growth was reduced modestly from about 3.18 percent to 3.10 percent, signaling slightly more conservative top line expectations.
• The Net Profit Margin was lowered slightly from roughly 6.0 percent to 5.87 percent, implying a minor downgrade to long term profitability assumptions.
• The Future P/E increased moderately from 12.5x to about 12.8x, indicating a somewhat higher expected valuation multiple despite softer growth and margin assumptions.