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 simultaneously raising the price target to JPY3,000.00 from the previous JPY2,300.00.
The downgrade comes despite the company reporting a robust 39% year-over-year increase in orders, including significant government contracts and license sales to financial institutions.
NS Solutions announced an improved operating profit outlook, increasing its forecast for the fiscal year ending March 2025 by JPY1.0 billion. This revision is attributed to savings on provisions for bonus payments.
However, Morgan Stanley anticipates that the company will further raise its guidance during the second-quarter results but believes that this potential increase is already reflected in the current stock price.
The firm’s valuation is considered to be stretched, especially after the revelation on August 26 that an activist investor had acquired a major stake in NS Solutions, causing a sharp rise in the stock’s value. Morgan Stanley suggests that investors reduce their holdings in the company.
Nonetheless, the firm acknowledges that there are upside risks, including the possibility that the activist investor’s actions could lead to an increase in the stock price.
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