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On Tuesday, Morgan Stanley reaffirmed its Overweight rating on Japan Post Holdings (NYSE:) Co., Ltd (6178:JP) (OTC: JPHLF), with a price target of JPY2,200.00. The firm’s confidence in the stock is driven by the belief that its share price will outperform the country index within the next 60 days due to its recent sell-off, which has rendered its valuation more attractive in the short term.
The sell-off in Japan Post Holdings’ shares is attributed to the impact of Yamato Holdings’ revision of its full-year F3/24 guidance on February 5, after the market closed, which also led to a correction in Yamato’s share price on Tuesday.
“We think risk-reward appeal is now stronger, as the stock inches closer to our bear case (¥1100),” said the analysts.
The total return yield for Japan Post Holdings is currently estimated at 8.4%, based on Morgan Stanley’s F3/25 forecast and the closing price of the stock on Tuesday. This attractive yield is one of the factors underpinning the analyst’s positive outlook on the investment potential of the company.
Morgan Stanley assesses that there is a very likely chance, quantified as approximately 70% to 80%, that Japan Post Holdings’ stock will follow the anticipated bullish scenario.
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