On Sep 13, 2013, we downgraded our recommendation on
Fujifilm Holdings Corporation
) to Neutral from Outperform, based on weak demand for compact
digital cameras in the first quarter of fiscal 2014.
Why the Downgrade?
Fujifilm experienced a loss of business in the first quarter
of fiscal 2014, due to a reduction in demand for compact digital
cameras as well as information technology equipments. The decline
is sales of digital cameras was the result of increased demand
for smartphones. This led to lower Imaging Solutions segment
Moreover, Fujifilm's diversified product portfolio exposes it
to stiff competition from different market players of different
products. In such a scenario, it becomes difficult for the
company to manage its prices while keeping a check on the
Fujifilm has a significant presence in the Americas, Europe
and Asia, apart from Japan. Roughly 58.9% of the company's total
revenue in the first quarter of fiscal 2014 was generated outside
Japan. The varying socio-political environment of each country
makes it challenging for Fujifilm to cope. Moreover, the
company's results in the quarter were hurt by the ever-increasing
prices of raw materials. This may induce high cost of production,
However, we cannot overlook the rising business of the company
in the pharmaceuticals business accompanied by the Documents
Solutions business. Fujifilm has been attempting to gain a
greater market share with the introduction of new products. The
company recently launched products ranging from lenses to
Other Stocks to Consider
Fujifilm currently carries a Zacks Rank #3 (Hold). Other
stocks worth a look in the industry include
Alliance Fiber Optic Products Inc.
Axcelis Technologies Inc.
). While Ciena Corp. carries a Zacks Rank #1 (Strong Buy),
Alliance Fiber and Axcelis Tech. carry a Zacks Rank #2 (Buy).
AXCELIS TECH (ACLS): Free Stock Analysis
ALLIANCE FIBER (AFOP): Free Stock Analysis
CIENA CORP (CIEN): Free Stock Analysis Report
FUJIFILM HLDGS (FUJIY): Free Stock Analysis
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