Omron: F3/27 1Q Results: Positive – IAB Profitability Improves More Than Expected

Research evidence excerpt

M

Update

August 5, 2026 01:00 PM GMT

Morgan Stanley Asia Limited+

Omron (6645) | Japan

Lisa Jiang

Equity Analyst

F3/27 1Q Results: Positive – IAB

Profitability Improves More

Than Expected

Morgan Stanley MUFG Securities Co., Ltd.+

Takeshi Kitaura

Equity Analyst

Takumi Okano

Research Associate

AlphaSignals Earnings Reaction

Weakens our thesis

Meaningful upside

Modest revision higher

Impact to our thesis

Financial results versus consensus

Direction of next 12-month

consensus EPS

Source: Company data, Morgan Stanley Research

Omron (6645.T, 6645 JT)

Factory Automation | Japan

Key Takeaways

1Q results showed stronger improvement than prior market expectations, with

feared JMDC impairment losses not materializing.

IAB saw a sharp improvement driven by volume effects, with profitability

Stock Rating

Industry View

Price target

Shr price, close (Aug 5, 2026)

Mkt cap, curr, basic (bn)

Avg daily trading value (bn)

Underweight

Attractive

¥4,900

¥5,931

¥1,166.2

¥7.3

increasing more than we expected.

The company expects IAB orders to remain high through 2Q onwards after

adjusting for front-loaded demand and seasonality.

We take a positive view of the results overshoot and the large full-year guidance

hike, and assume the shares will advance near-term.

• 1Q results: 1Q OP increased +226% YoY to ¥18.9bn, greatly beating our

¥12bn forecast, the ¥4.6bn consensus, and guidance, driven primarily by IAB

(IAB OP grew +101% YoY to ¥21.3bn).

• IAB marks considerable improvement: 1) 1Q orders: Further recovery, at

+61% YoY and +18% QoQ. This included front-loaded demand ahead of price

hikes in Japan, which if stripped out left a +7% QoQ increase in orders by our

estimate. 2) 1Q profitability: Volume effects and operating income drove

OPM improvement to 16.2% in 1Q, near the historic peak.

• Full-year guidance: OP guidance was hiked sharply from ¥62bn to ¥80bn,

centering on IAB. Revised guidance is for IAB profitability of just 13% after

adjusting for front-loaded demand and factoring in cost increases linked to

the Middle East situation.

Mitsubishi UFJ Morgan Stanley Securities Co., Ltd. (“MUMSS”) is acting as financial

…