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8035: Rising Guidance And Dividends Will Likely Fail To Justify Current Price

Cautious Capex Cuts And Rising Costs Will Hurt Semiconductor Outlook

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8035
AnalystLowTarget
Not Invested
Published 10 Aug 2025

Update shared on 12 Dec 2025

Fair value Increased 18%
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AnalystLowTarget's Fair Value
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1Y
32.0%
7D
-4.9%

Analysts have raised their price target on Tokyo Electron from ¥21,700 to ¥25,700, citing higher expected revenue growth and a richer future earnings multiple, despite a slightly higher discount rate and stable profit margins.

What's in the News

  • The company raised full year fiscal 2026 consolidated guidance and now expects net sales of JPY 2,380,000 million, operating income of JPY 586,000 million, and net income attributable to owners of parent of JPY 488,000 million, up from prior forecasts (company guidance).
  • The company increased expected net income per share for fiscal 2026 to JPY 1,064.77 from a previous forecast of JPY 969.12, reflecting a stronger profit outlook (company guidance).
  • The board approved a higher interim dividend for the first half of fiscal 2026 at JPY 264 per share, revised upward from the earlier forecast of JPY 245 per share, with an effective date of November 28, 2025 (company announcement).
  • The company confirmed a dividend policy targeting a payout ratio of around 50 percent of net income attributable to owners of parent, linking shareholder returns to business performance on an ongoing basis (company announcement).
  • The company provided year end dividend guidance for fiscal 2026 at JPY 269 per share, down from JPY 327 per share a year earlier, indicating a more moderate payout despite higher earnings (company guidance).

Valuation Changes

  • Fair Value Estimate increased meaningfully from approximately ¥21,700 to about ¥25,700, reflecting a higher intrinsic valuation for Tokyo Electron shares.
  • Discount Rate rose slightly from about 8.51 percent to roughly 8.70 percent, implying a modestly higher required return in the valuation model.
  • Revenue Growth Assumption increased significantly from around 3.1 percent to roughly 4.8 percent, signaling a stronger long term growth outlook.
  • Net Profit Margin edged down marginally from about 22.0 percent to roughly 22.0 percent, indicating essentially stable long run profitability assumptions.
  • Future P/E Multiple rose moderately from about 21.4x to roughly 24.0x, suggesting a somewhat richer valuation attached to future earnings.

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Disclaimer

AnalystLowTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystLowTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystLowTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.