Due to the coronavirus pandemic, the new measure, which went into effect on July 12, includes shorter store opening hours, reduced capacity events, and early closing for restaurants and bars in Tokyo, Osaka, and the Okinawa prefecture. Since April 2020, the country has been declared in a state of emergency four times.
Goldman cut its third-quarter growth forecast for Japan, but raised its fourth-quarter forecast to 8.4 percent from 7.7 percent as more of the country’s population is immunized. “We now expect pent-up demand to be concentrated in 4Q as economic activity normalizes,” said the bank’s analysts in a July 13 note.
In addition, the bank issued a series of research notes on Japanese stocks with buy ratings, including:
Takeuchi Heavy Machinery for its likely “high levels” of orders, despite an increase in transportation costs. In a research note published on July 13, Goldman said the stock had a potential 36.6 percent upside to its price target.
Zeon, a battery component manufacturer, following a meeting with the bank’s head of energy materials. In a research note published on July 12, Goldman gave it a potential upside of 60%. “We reiterate our Buy rating, which is primarily based on the growth potential of Zeon’s specialty materials business, centered on LiB materials,” the bank’s analysts wrote, referring to the company’s lithium-ion rechargeable battery components.
Relo is a company that provides employee benefits. In a July 12 note, Goldman said the stock has a 19.6 percent upside potential to its price target.
Cosmos Pharmaceuticals, for its potential for growth. “Cosmos has a large opportunity to open new stores, which is supported by its unique business model of discounting national brand products in the drugstore industry,” the analysts wrote. In a July 12 note, Goldman said the stock has a 15.9 percent upside potential to its price target.
In a research note published July 12, chemical firm Fujimi estimated the stock has a potential 36.2 percent upside to its price target due to its “top global share” in a part of the semiconductor manufacturing process known as chemical mechanical planarization.
Yaskawa Robotics and Electricals for its “strong results” that outperformed Goldman’s “bullish estimates on all counts.” Orders for its servo motors — parts embedded in a robot’s joints — increased 74 percent year on year, according to the bank, which estimated in a July 9 research note that the stock has a potential 33.1 percent upside to its price target.
In a July 2 note, Goldman forecasted a 33% increase in earnings per share for the Tokyo Stock Price Index (TOPIX) in 2021. “We believe it is appropriate to shift the weight somewhat from value to growth/quality,” the analysts wrote. Value stocks are those that investors believe are undervalued, whereas growth stocks are those that are expected to outperform the market.
In light of this, Goldman rebalanced some of its stock baskets, removing some shares and adding others. It, for example, added Fujitsu, Honda Motor, and Toyota Industries to its basket of “Japan stocks in which foreign mutual funds are most Overweight.”
Halliburton stock (NYSE: HAL)
Analyst Neil Mehta raised the energy stock from neutral to buy in a client note, saying that higher oil prices and internal improvements could lead to a rebound and dividend increase.
“We believe that HAL represents an opportunity at current levels given the recent pullback, a stronger-than-expected margin outlook through 2023, accelerated deleveraging prospects, and the potential for improving capital return to shareholders through an increased dividend as early as 2022,” the note said.
Halliburton shares have gained only 6.2 percent this year, trailing the broader market and the energy sector. Goldman maintained its $26 per share price target for the stock, which is nearly 30% higher than where shares closed Tuesday.
Under the surface, the company has seen changes such as a greater reliance on international business and increased pricing power. According to Goldman, this should allow Halliburton to drive higher returns and increase payouts.
“A higher return on capital should result in a higher return on capital.” As a result, we raise our dividend forecast and now anticipate that the company will increase its dividend from $0.18 per year in 2021 to $0.72 per year in 2022, with dividend growth of 10% per year thereafter,” the note said.