Analyst Euan McLeish of Bernstein maintained a Buy rating on Ajinomoto Co (AJINF – Research Report), boosting the price target to Yen8,500.00.
Euan McLeish has given his Buy rating due to a combination of factors influencing Ajinomoto Co’s strategic direction and financial performance. The company is actively restructuring its North American Frozen Food business, which includes significant layoffs and the potential closure of its Hayward plant. This restructuring is part of a broader initiative that began in 2023, aimed at improving cost efficiency and profitability in their US operations.
Despite the challenges, Ajinomoto has shown progress with its restructuring efforts, as evidenced by the increase in Americas Frozen Foods margins from 1.0% in FY3/23 to 4.3% in FY3/24. Although there is a slight expected dip in margins for FY3/25, the ongoing restructuring is anticipated to enhance margins above 4% by FY3/26. These efforts, along with similar initiatives in Asia, are expected to improve the company’s return on invested capital, supporting the Outperform rating with a price target of ¥8,500.