Morgan Stanley downgrades NS Solutions stock to underweight, raises target by Investing.com
On Wednesday, Morgan Stanley downgraded shares of NS Solutions Corporation (2327:JP) (OTC: NSSXF) from Equalweight to Underweight, while also raising the price target to JPY3,000.00 from JPY2,300.00 previously.
The downgrade comes despite the company reporting a 39% year-on-year increase in orders, including key government contracts and the sale of licenses to financial institutions.
NS Solutions announced an improved outlook for operating profit, raising its forecast for the fiscal year ending March 2025 by JPY1.0 billion. This revision was created to save on bonus payment arrangements.
However, Morgan Stanley expects the company to raise its guidance again during the second quarter results but believes that this potential increase is already reflected in the current share prices.
The company's valuation is considered inflated, especially after it was revealed on August 26 that an activist investor had acquired a majority stake in NS Solutions, which caused a significant increase in the stock price. Morgan Stanley suggests that investors reduce their holdings in the company.
However, the company acknowledges that there are risks, including the possibility that the actions of an activist investor could lead to an increase in the stock price.
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