Back to top

Analyst Blog

On February 5, we downgraded photographic image company, Fujifilm Holdings Corporation (FUJIY - Analyst Report), to Underperform based on the company’s disappointing outlook for the fourth quarter 2013.

Why the Downgrade?

Estimates for Fujifilm, which focuses mainly on the photo imaging business, have been declining ever since it reported a bleak outlook for the fourth quarter of 2013. Fujifilm reported impressive results in the third quarter, which grew year over year as well as beat Zacks Consensus Estimates. However, it reduced its overall outlook for the upcoming quarter. The company reduced its operating income forecast to ¥105.0 billion from the previously announced ¥110.0 billion. However, the company now expects its net income for the year to come at ¥50.0 billion compared with the previously announced ¥45.0 billion. Fourth quarter revenue guidance was maintained at ¥2,210 billion,  

Following the not-so-great outlook for the fourth quarter, the Zacks Consensus Estimate for 2013 has gone down 18.1% to $1.04 per share. The Zacks Consensus Estimate for 2014 has also declined 0.6% to $1.49.

Causes for Concern

The deterioration of the company’s traditional photography business is a major threat to its prosperity. Also, the vast presence of Fuji’s operation beyond Japan exposes it to various regulations in different regions. The major source of income generating Document Solutions segment is also not performing as desired and is losing market share.

On top of this, yen appreciation is a major drawback for the company. As most of the businesses of Fuji are done outside Japan, an increase in the value of yen leads to lower earnings for the company. Based on these factors, it seems difficult for Fuji to attain its revenue guidance for the upcoming quarter.

Other Stocks to Consider

While we remain bearish on Fuji, other technology stocks worth a look are Diodes Incorporated (DIOD - Snapshot Report), holding a Zacks Rank #1 (Strong Buy); while Interdigital Inc. (IDCC - Snapshot Report) and On Semiconductor Corp. (ONNN - Analyst Report); both hold a Zacks Rank #2 (Buy).

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
RPC INC RES 24.91 +8.35%
LITHIA MOTO… LAD 94.59 +4.60%
DELTA AIR L… DAL 39.15 +3.90%
FLAMEL TECH… FLML 14.51 +3.50%
SOUTHWEST A… LUV 28.87 +2.92%