NEC (6701.T): Q1 results: Positive. Sizable consensus beat, upwardly revised guidance still looks beatable

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NEC (6701.T): Q1 results: Positive. Sizable consensus beat, upwardly revised guidance still looks beatable

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29 Jul 2026 06:27:58 ET │ 10 pages

NEC (6701.T)

Q1 results: Positive. Sizable consensus beat, upwardly revised guidance

still looks beatable

CITI'S TAKE Buy

Price (29 Jul 26 15:30) ¥4,613.0 Q1 results were brisk, significantly exceeding consensus. The feared public

Target price ¥5,100.0 contract roll-off and memory components hits proved minimal, and NEC

substantially hiked full-year guidance. April-June OP reached ¥58.8bn Expected share price return 10.6%

(YoY +66%), significantly exceeding consensus (¥36.8bn). Both IT services Expected dividend yield 0.9%

and social infrastructure performed better than plan, which led to the Expected total return 11.4%

upward guidance revision. In IT services, the impact from large public Market Cap ¥6,118,425M

project roll-offs and memory price increases proved weaker than market US$37,343M

expectations, while project selection drove stronger-than-expected mix

improvements, which led to a greater-than-expected +2ppt YoY

expansion in the OPM. Earnings were brisk in the social infrastructure

segment, where defense profits were up significantly, thanks chiefly to Masahiro ShibanoAC

system sales (we believe security), while the marine systems business also +81-3-6776-4641

turned profitable. masahiro.shibano@citi.com

Moriya Koketsu

Implications — Following strong April-June results, the company raised its full-year +81-3-6776-8304

non-GAAP OP outlook from ¥420bn to ¥430bn. However, based on company moriya.koketsu@citi.com

comments in April-June, which suggest the hit from public contract roll-offs and

memory price increases is not as significant as previously feared, we believe the