We are continuing our Hold on Nomura Holdings, Inc. (NMR). Nomura reported a fiscal fourth quarter (March 31) net loss of ¥153.9 billion, below our estimate. This was due to a ¥132 billion increase in loss provisions for monoline insurers and a ¥22 billion yen unrealized loss in the U.S. CMBS business in Global Markets, which led to a ¥208.9 billion pretax loss for the quarter.
Pretax earnings in Global Investment Banking, Domestic Retail, and Asset Management fell sharply both sequentially and year over year due to global financial turmoil and a weak domestic stock market. The one bright spot was Global Merchant Banking that booked ¥20.1 billion in pretax earnings due to a valuation gain in Annington.
We are slashing our 2009 fiscal year (March 31) EPADS estimate to $0.45 from $0.70, due to lingering effects of problems in the U.S. subprime and other credit markets. Nomura Holdings is trading at 24.8X the consensus estimated EPADS for the fiscal year ending March 31, 2009, 105% above the financial sector median of 12.1X, based upon consensus estimates. We believe the shares are fully valued and see limited upside. Our target price of $18 represents a P/E multiple of roughly 40X our 2009 EPADS estimate of $0.45.
Read the full analyst report on NMR.
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