NEC (6701): New MTP positive, targets ~15% profit CAGR

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NEC (6701): New MTP positive, targets ~15% profit CAGR

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NEC (6701)

New MTP positive, targets ~15% profit

CAGR

Reiterate Rating: BUY | PO: 7,100 JPY | Price: 4,130 JPY

MTP targets doubling of non-GAAP OP over five years 12 May 2026

Key targets are revenue CAGR of over 3%, non-GAAP OP margin above 15% (vs 11.1% in Equity

FY3/26), non-GAAP OP doubling to ~¥800bn (CAGR 15%), and non-GAAP EPS CAGR

Hideaki Tanaka >>

above 15%. Revenue growth is guided at 3–5% CAGR for both IT Services and Social Research Analyst

Infrastructure. IT Services targets +4–6% in Japan and +3–5% overseas, while Social BofAS Japan +81 3 6225 8431

Infrastructure targets +3–5% in Telecom Services and +4–6% in ANS. Non-GAAP OP hideaki.tanaka@bofa.com

margin targets are ~20% for IT Services (vs 13.4%) and high-teens for Social Hiromu Yabuki >>

Infrastructure (vs 8.9%). Research Analyst BofAS Japan

hiromu.yabuki@bofa.com

Implications for share price / evaluation of the new MTP

We view the plan as positive for the share price, given the high non-GAAP OP CAGR of

15% and explicit management commitment. Key focus points are: (1) Domestic IT Stock Data

Services: BluStellar targets revenue CAGR of 13% and non-GAAP OP margin of 25% (vs

14.5%), while the base business is assumed flat; the BluStellar margin target appears Price 4,130 JPY

ambitious but achievable given historical margin expansion and productivity gains. (2) Price Objective 7,100 JPY

ANS: targets appear conservative; normalization of marine systems and expansion in Date Established 4-Mar-2026

aerospace and defense suggest upside to revenue. (3) CSG: planned subsidiary Investment Opinion C-1-7

conversion in 2026 is not included in the MTP (revenue ¥180bn, adjusted OP ¥30bn), 52-Week Range 3,594-6,194 JPY

implying additional upside.