COVER: Correction: F3/26 Results: Toward Business Restructuring

Research evidence excerpt

COVER: Correction: F3/26 Results: Toward Business Restructuring

Update

May 14, 2026 03:43 PM GMT

Morgan Stanley MUFG Securities Co., Ltd.+MCOVER (5253) | Japan Akiho Toyama

Equity Analyst

Correction: F3/26 Results: Akiho.Toyama@morganstanleymufg.comKatsumi Arai +81 3 6836-8405

Katsumi.Arai@morganstanleymufg.com +81 3 6836-8918

Toward Business Restructuring

COVER (5253.T, 5253 JP)

Services / Leisure | Japan

Reaction to earnings

Stock Rating Overweight

Unchanged Meaningful shortfall Modest revision lower Industry View In-Line

Impact to our thesis Financial results versus consensus Direction of next 12-month Price target ¥1,900

consensus EPS Shr price, close (May 14, 2026) ¥1,433

Mkt cap, curr, basic (bn) ¥94.1

Source: Company data, Morgan Stanley Research Avg daily trading value (bn) ¥3.3

Key Takeaways

Cover's announcement of conservative F3/27 guidance was not in itself a surprise,

but the outlook for profit decline to a lower-than-expected ¥7bn is likely to leave

a negative impression.

The company is moving toward business restructuring, with concentrated capital

investments in talent value creation.

Although there is some basis for expectations of improvement in business

operations, the company's outlook suggests there may be a lull before earnings

pick up as it pursues upfront investments toward this end.

Cover reported F3/26 OP about ¥1.2bn below our forecast. Disposals and

writedowns of low-turnover stock (CoGS ¥1.3bn) exceeded our estimate by about

¥0.6bn, and streaming and merchandising earnings also fell short of our

expectations due to flagging momentum in fan enthusiasm.

We had anticipated that the company's F3/27 guidance would be conservative, but

due to upfront investments to strengthen talent support systems the 1H operating