We are maintaining our Neutral recommendation on
Fujifilm Holdings Corporation
We believe that the company's continued focus on technological
innovation will keep it abreast with the rapidly changing dynamics
of the digital market. The company's strong promotional efforts are
also expected to increase sales and ensure significant value for
The company's margin management tactics are encouraging and
looks to be beneficial for the long term. Its cost-effective
business structure looks favorable for business growth and is
anticipated to generate sustained profitability.
With a huge talent pool and enviable brand equity, Fujihas
diversified itself overseas, especially in the emerging regions
beyond the domestic photographic film market. Its sales bases
include United States, Europe and larger parts of Asia. The
company's continued proactive investment in priority business
fields looks significant as well.
However, Fuji's unavoidable business risks remain nagging
concerns for the company. Volatile prices of raw material like
silver and aluminum raise input costs, thereby impacting margins.
Also, asignificant portion of the company's internationally
generated income is exposed to exchange rate fluctuations.
Nevertheless, continued sluggishness in the European economy and
slower-than-expected growth rate in the U.S. are expected to pose a
threat. Even the domestic demand fluctuation continue to jeopardize
Fuji's earnings stream.
Moreover, cutthroat rivalry from competitors like
); who have been continuously developing, launching and marketing
hi-tech digital expertise; threatens the company's traditional
businesses. Also the risk of overcapacity in photo-imaging and
photographic films sector depresses profit.
Currently, the company has a Zacks #4 Rank, implying a
short-term (1-3 months) 'Sell' rating.
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