Growing price competition in emerging technologies, increasing cost of raw materials has hurt Hitachi, Ltd. (HIT). Moreover, its net cash balance (cash less debt) has been continuously deteriorating, which has resulted in a cut to its annual dividend. However, the company continues to make progress in implementing its management plan for cutting operating costs and achieving profitability.
Hitachi is currently trading at the mid-point of its 52 week high/low range. Although the company is executing well, it has cut its fiscal 2008 net income guidance. On a price-to-sales basis, the stock is trading at a very reasonable 0.3x estimated fiscal year ending March 2008 estimates. We believe the stock has some room for appreciation, but don't expect it to reach its 52-week high given a more uncertain economic outlook.
On February 5, 2008, Hitachi announced financial results for fiscal 2007 third quarter ended December 31, 2007. Net income for the quarter was $110.4 million or $0.32 per ADS compared to a net income of $10.6 million or $0.03 per ADS in the year-ago quarter. Total revenue was $23,914.1 million compared to $20,910 million in the year-ago period. We, therefore, maintain a Hold rating on the shares of HIT with a six-month target price of $77. As such, our six-month target price of $77 reflects a P/S multiple of 0.3x fiscal year ending March 2008 revenue per ADS estimate of $302.13.
Read the full analyst report on HIT.
Get real-time market insights and profitable stock recommendations from the team of analysts at Zacks Equity Research. See all todays Analyst Blog entries on Zacks.com.