Downgrade to Hold but Raise PT

Research evidence excerpt

Downgrade to Hold but Raise PT

Japan | IT Services

Internet Initiative Japan EquityJuneResearch9, 2026

RATING | TARGET | ESTIMATE CHANGEDowngrade to Hold but Raise PT

We downgrade IIJ to Hold while raising PT to ¥3,600 on valuation. RATING HOLD (BUY)

The share price has surged >40% in three months ((vs Topix up ~6%) PRICE ¥3,224^

on activist involvement, re-rating from a discount to a premium. While PRICE TARGET | % TO PT ¥3,600 (¥2,750) | +12%

fundamentals remain supported by network integration tailwinds, we see 52W HIGH-LOW ¥3,267 - ¥2,098

these largely priced in. Further upside is likely contingent on additional FLOAT (%) | ADV MM (USD) 59.7% | 15.18

activist accumulation. MARKET CAP ¥571.2B | $3.6B

TICKER 3774 JP

Valuation: We downgrade to Hold while raising our PT to ¥3,600. The share price has recently ^Prior trading day's closing price unless otherwise noted.

approached a ~10-year high, driven in part by activist involvement. IIJ was a laggard last fiscal

year

FY (Mar) CHANGE TO JEFe JEF vs CONS

Why downgrade despite a higher PT? 2025 2026 2025 2026

Valuation call: Activist buying has driven recent share price appreciation. We downgrade REV* <1% +2% NM +1%•

to Hold (from Buy) while raising our PT to ¥3,600 (from ¥2,750), as upside to the new PT EPS +4% -3% +4% -3%

is limited. The revised PT implies 24.5x P/E on FY EPS, positioning IIJ at a premium to

the sector average (~20x, as of June 3, 2026). The share price has risen ~48% over the 2025 (¥) Q1 Q2 Q3 Q4 FY3

past three months and ~17% in the past month, largely reflecting continued buying by the EPS -- -- -- -- 136.51

activist. As of June 5, 2026, Oasis DKR holds 8%. The top shareholders, KDDI and NTT, PREV 131.39

each hold 11.1%. Further upside is possible if activist increases its stake toward similar *Rev.