Pilot

Research evidence excerpt

Pilot

Global Markets Research

7 July 2026Pilot

7846.T 7846 JP / EQUITY: JAPAN CHEMICALS & TEXTILES

RatingWe expect margins to improve y-y Remains Buy

Target price

Increased from 1,867 JPY 1,950We expect inventories in Europe and US to return to appropriate levels

Closing price JPY 1,742.5We reiterate Buy rating 6 July 2026

We update our earnings forecasts and target price for Pilot in light of 26/12 Q1 results. We

Implied upside +11.9%still expect sales to continue growing on overseas markets thanks to the differentiation

offered by the company's technological prowess and quality in writing instruments. We

forecast overseas sales CAGR of around 8% going forward, on a par with growth through

18/12 (over the 10/12 baseline), when the company started to tap overseas markets.

Relative performance chartOperating profit CAGR during that period was also over 10%, and we therefore reference

the historical P/E based on same-year EPS seen during 2011–18 in our target price

calculation. Excluding 2014–16, when there was a boost from inbound demand, the stock

traded in a P/E range of around 10–20x during this period. We calculate our target price of

¥1,950 by applying a fair-value P/E of 15x, the midpoint of this range, to our 26/12

adjusted EPS forecast of ¥129.9.

Earnings forecasts: We expect return to profit growth trajectory on sales growth,

return to appropriate inventory levels in West

We forecast 26/12 sales of ¥138.7bn (up 10% y-y) and operating profits of ¥18.99bn (up

14%), partly thanks to yen depreciation as well as no major negative impacts on input

procurement. We forecast sales growth of 8% in Japan on a boost from new products

such as Frixion Ball Switch and price revisions in fall 2025. We expect US sales to rise