BlockBeats News, June 26th - Citigroup raised its target price for Kabuto Holdings significantly from 73,000 yen to 140,000 yen in a report released on June 25th and maintained a "Buy/High-Risk" rating. The reasons cited were strong enterprise SSD demand, ongoing tight NAND supply-demand dynamics, and the potential for long-term supply agreements to enhance profit visibility.

On June 25th, Kabuto closed at 103,850 yen. Based on Citigroup's new target price, the stock still has approximately 35% potential total return. The report stated that NAND market prices have been rising since the fourth quarter of 2025, with "extremely strong" demand from servers and data center applications, and industry-wide supply shortages may persist until 2027.

Citigroup's profit forecast for Kabuto is quite aggressive. The bank expects the company's revenue for the first quarter of FY3/27 to reach 1.82 trillion yen, up 81% QoQ; operating profit to be 1.40 trillion yen, with an operating profit margin of 77.1%. Revenue for the second quarter is further projected to rise to 2.43 trillion yen, with operating profit reaching 1.98 trillion yen and an operating profit margin of 81.5%.

For the full year, Citigroup forecasts Kabuto's FY3/27 revenue to reach 9.46 trillion yen and operating profit to be 7.68 trillion yen, with an operating profit margin of approximately 81%. The bank also anticipates that from FY3/27 to FY3/29, Kabuto's operating profit margin will remain above 80%.

Citigroup believes that as Kabuto advances its Long-Term Agreements (LTA), the cyclical volatility of company earnings is expected to decrease. Historically, the market has applied a valuation discount to Kabuto due to the high volatility of the NAND industry and the company's business concentration. If the long-term agreements expand in scope, this discount may begin to narrow.

However, Citigroup also emphasizes that Kabuto is a "high-risk" stock. Risks include the potential for the U.S. to relax restrictions on semiconductor equipment exports to China, which could improve China's NAND supply; an acceleration in industry capital expenditures could lead to a re-emergence of supply-demand imbalances; and inventory adjustments in smartphones or data centers could disrupt price increases. Additionally, a strengthening yen would erode profits, with Citigroup estimating that for every 1 yen appreciation, Kabuto's operating profit would decrease by around 40 billion yen.