6702: AI Collaboration And Tender Offer Outlook Will Support Margins After List Removal

Analysts have modestly raised their price target on Fujitsu by roughly ¥55 per share, reflecting a slightly higher fair value and profit margin outlook, even as the stock was recently removed from a regional conviction list. They view this change as a recalibration of conviction rather than a reversal of the fundamental thesis.

Analyst Commentary

Recent research updates on Fujitsu highlight a more nuanced stance on the stock, with conviction levels adjusted even as the underlying investment case remains largely intact. The removal from a regional conviction list is being interpreted as a recalibration of risk reward rather than a wholesale downgrade of fundamentals.

Bullish Takeaways

• Bullish analysts point to continued resilience in Fujitsu's core IT services and solutions business, which supports a steady earnings base and justifies a slightly higher fair value range.
• Improving margins in higher value segments, such as digital transformation and cloud related services, are seen as catalysts that could drive upside surprise to medium term profit growth.
• The company’s disciplined capital allocation and focus on shareholder returns are viewed as supportive of valuation, particularly if free cash flow conversion remains robust.
• Positive sentiment around the broader technology spending cycle in Asia is cited as an additional tailwind that could sustain revenue growth above current conservative assumptions.

Bearish Takeaways

• Bearish analysts highlight that the removal from a conviction list signals reduced confidence in near term outperformance, even if the longer term thesis is unchanged.
• There is concern that execution risk in large scale transformation projects could limit margin expansion, placing a cap on valuation re rating potential.
• Some see the current share price as already discounting much of the anticipated profit improvement, leaving less room for multiple expansion if growth slows.
• Macro and policy uncertainties in key Asia Pacific markets are viewed as potential headwinds to IT spending, which could pressure Fujitsu’s growth trajectory versus prior expectations.

What's in the News

• Developed a multi AI agent collaboration technology to securely coordinate AI from multiple vendors across supply chains, with field trials at Rohto Pharmaceutical and Science Tokyo starting January 2026 and expansion into Dynamic Supply Chain services targeted by end fiscal 2026 (Key Developments)
• Board to consider a tender offer and execute a Business Integration Agreement and Tender Offer Agreements with prospective tendering shareholders at the November 28, 2025 board meeting (Key Developments)
• RIKEN to use new NVIDIA GPU based supercomputers as proxy systems for codesigning FugakuNEXT, the next generation supercomputer jointly developed with Fujitsu. It is expected to deliver roughly 100x application performance versus existing CPU based systems (Key Developments)
• Expanded strategic collaboration with NVIDIA to create full stack AI infrastructure. This integrates FUJITSU MONAKA CPUs with NVIDIA GPUs via NVLink Fusion and aims to deploy industry specific AI agents across sectors such as healthcare, manufacturing, and robotics (Key Developments)
• Completed share repurchase of 5,654,000 shares, about 0.32 percent of outstanding, for ¥20,521.3 million under the buyback program announced April 24, 2025 (Key Developments)

Valuation Changes

• The fair value estimate has risen slightly from approximately ¥4,422.73 to ¥4,477.27 per share, reflecting a modestly higher intrinsic value.
• The discount rate edged up marginally from about 7.10 percent to 7.11 percent, implying a slightly higher required return on equity.
• The revenue growth assumption eased slightly from around 4.00 percent to 3.97 percent, indicating a marginally more conservative topline outlook.
• The net profit margin increased modestly from roughly 9.05 percent to 9.07 percent, signaling a small improvement in expected profitability.
• The future P/E multiple has risen slightly from about 26.36x to 26.66x, suggesting a modestly higher valuation multiple applied to forward earnings.