Analyst Note| Jason Kondo |
Wide-moat Fanuc’s results for fiscal 2021's first quarter, ended June 30, were stronger than we expected. We raise our fair value estimate to JPY 27,000 per share from JPY 25,000 after adjusting our fiscal 2021 revenue projection to reflect the latest results and revised expectations based on management’s guidance revision. Over the near term, we expect the two largest issues will be supply-side issues from parts procurement, which have already started to extend lead times between order and shipments, and uncertainty about the proportion of up-front purchases made by Fanuc’s customers (particularly for the robomachine and factory automation businesses), as orders have been at record levels. Despite these immediate hurdles, we think the latest results show that actual pent-up demand continues to lurk, and Fanuc will realize continued growth over the medium term. We think the shares are currently fairly valued as medium-term growth prospects are already likely priced in.