On Monday, Internet Initiative Japan Inc. (3774:JP) (OTC: IIJIY) stock received a Buy rating from Citi, accompanied by a price target of JPY3,000.00. The new coverage highlights the potential for expansion after a proactive investment phase, despite recent performance setbacks.
Citi’s assessment acknowledges the execution risks associated with Internet Initiative Japan’s strategic growth in the systems integration (SI) business. These risks became apparent as the company’s fiscal year ending March 2024 results did not meet consensus expectations, causing a significant decline in the stock’s value.
The firm’s analyst cited the shortfall in actual and estimated figures compared to the consensus as a factor in the recent correction of the stock’s price. Nevertheless, Citi maintains a positive outlook on the company’s medium-term prospects, suggesting that the business lines of Internet Initiative Japan are expected to grow following the current phase of upfront investments.
The High Risk rating assigned by Citi reflects the challenges the company faces amidst its expansion efforts. The proactive expansion phase in the SI business has been identified as a primary source of risk, potentially impacting the company’s performance.
Despite the recent financial results falling short of expectations, Citi’s stance indicates a belief in Internet Initiative Japan’s ability to recover and expand its operations, presenting a medium-term investment opportunity for investors. The set price target of JPY3,000.00 stands as a testament to this optimistic forecast for the company’s future.
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