Raising Price Target on Data Center Growth Opportunities

研报英文原文证据摘录

Raising Price Target on Data Center Growth Opportunities

Japan InsightM

Executive Summary

Maintain OW rating, raise price target from from ¥4,000 to ¥6,000

Our previous price target was based on P/E 15x our CY27 non-GAAP EPS forecast,

reflecting a 10% discount to the average valuation of peers including Infineon

Technologies, STMicroelectronics, and NXP Semiconductor, to account for uncertainties

surrounding the execution of Renesas' software/digitalization strategy and capital

allocation.

We now raise our target P/E to 22x our CY27 non-GAAP EPS forecast. While uncertainties

regarding the software/digitalization strategy remain, we are reducing the valuation

discount to peers from 10% to 5%, reflecting the re-rating of peer stocks as well as the

factors outlined in the section below:

Exhibit 1: Renesas Electronics: 1-year forward P/E (Consensus EPS basis)

(x) Renesas Electronics (6723) (yen)

40 5,500

P/E (Left scale)

4,500

Stock price (Right scale)

3,500

20 2,500

1,500

Our target 500 5

multiple

0 -500

15 16 17 18 19 20 21 22 23 24 25 26 (CY)

Source: FactSet, Morgan Stanley Research

Exhibit 2: Global semiconductor companies: Valuation

Rating Stock Price Market Cap P/E EV/EBITDA ROE

Industry Co. Price target 6/18/26 26YTD (US$ bn) FY25 FY26e FY27e FY25 FY26e FY27e FY25 FY26e FY27e

Texas Instruments Attractive UW $ 221.0 $ 322.9 86% $293.8 31.9 41.3 38.0 20.9 27.7 24.9 30% 42% 43%

Analog Devices Inc. Attractive OW $ 428.0 $ 164.0 -40% $211.6 30.1 35.4 29.6 24.1 29.2 24.5 7% 13% 16%

Infineon Technologies In-Line OW € 91.00 € 82.0 117% $123.0 27.1 47.2 29.8 12.2 21.6 15.9 6% 9% 14%

NXP Semiconductor Attractive OW $ 335.0 $ 313.3 44% $79.1 18.4 20.9 16.9 15.3 17.0 14.0 21% 33% 30%

STMicroelectronics In-Line OW € 74.00 € 67.9 203% $71.1 58.5 66.1 28.1 9.0 23.1 15.6 1% 5% 13%