NEC (6701): Growth commitment reaffirmed in new medium-term plan

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NEC (6701): Growth commitment reaffirmed in new medium-term plan

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NEC (6701)

Growth commitment reaffirmed in new

medium-term plan

Reiterate Rating: BUY | PO: 6,900 JPY | Price: 4,162 JPY

Cut PO to ¥6,900; reiterate Buy 18 May 2026

We update our estimates for NEC following FY3/26 results, the new medium-term plan, Equity

and completion of the CSG acquisition (announced on 15 May). While the revisions are

modest, management’s growth commitment in the new plan increases confidence in

Key Changesearnings growth. We lower our price objective (PO) to ¥6,900 (from ¥7,100) by reducing

the applied FY3/28E P/E to 26x from 28x in line with market conditions, but reiterate (¥) Previous Current

our Buy rating. Our Buy thesis rests on three points: (1) growth and margin expansion in Price Obj. 7,100.00 6,900.00

IT services driven by the BluStellar DX model, (2) expansion in defense-related 2027E Rev (m) 3,760,000.0 3,782,000.0

businesses, and (3) strong earnings growth prospects. We estimate non-GAAP operating 2028E Rev (m) 4,100,000.0 4,080,000.0

profit CAGR of +17% over FY3/26-29, a top-tier level in the sector. 2029E Rev (m) NA 4,290,000.0

2027E EPS 216.24 211.84

2028E EPS 255.09 263.88BluStellar to drive earnings growth

NEC targets BluStellar to reach revenue of ¥1.3tn (CAGR 13%) and a non-GAAP 2029E EPS NA 302.73

operating margin of 25% (non-GAAP operating profit of ¥325bn, CAGR 26%) by FY3/31. 2027E EBITDA (m) 600,000.0 605,000.0

The portfolio comprises Scenario & Offering, Product & Service, and ABeam. We focus 2028E EBITDA (m) 690,000.0 705,000.0

on the growth of Scenario & Offering, which carries the highest margins. 2029E EBITDA (m) NA 775,000.0

2027E DPS 44.00 43.00

New medium-term plan positive; 5-year profit CAGR 15%