We have recently upgraded our recommendation on
FUJIFILM Holdings Corporation
) from Underperform to Neutral.
We hold optimism toward the company's huge talent pool and
enviable brand equity, which will support its product portfolio in
response to growing market needs. Also, Fujifilm's continued focus
on technological innovation is expected to keep it abreast of the
growing pace in the ever-changing digital market.
Fuji's diversified sales bases across United States, Europe and
larger parts of Asia is anticipated to strengthen the company's
demand across these regions while boosting its financial results
over the coming quarters.
The company's margin management tactics are quite encouraging
and looks to be impressively beneficial for the long
term.FUJIFILM'scost-effective business structure looks favorable
and is anticipated to generate sustainable, profitable growth.
Also, thestructural reform programs are also expected to
effectively counter rising operating costs and expenses.
The company's strong promotional efforts are also expected to
increase sales and ensure significant value for shareholders.
Adding to these, the company's continued proactive investment in
priority business fields looks significant.
However, concern remains as we witness cutthroat rivalry from
Fuji's competitors like
), who are in the continuous process of developing, launching and
marketing hi-tech digital expertise worldwide. Moreover,
overcapacity in photo-imaging and photographic films sector
threatens the company's traditional businesses.
Surging prices of raw material like silver and aluminum impact
margins. Moreoever, a significant portion of the company's
internationally generated income falls prey to exchange rate
fluctuationswhile hurting its profitability.
Risk remains within the company's domestic and international
market as well. The global economic fluctuationsand
slower-than-expected growth rate in the U.S. remains a matter of
concern for the stock. On the other hand, the lingering effect of
the Great East Japan earthquake and floods in Thailand in 2011
continue to jeopardize Fuji's earnings stream in the domestic
The company has a Zacks #2 Rank, implying a short-term (1-3
months) 'Buy' rating.
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