Japan Specialist

Mark Chadwick

Equity Bottom-Up

The <a href="https://www.smartkarma.com/entities/toshiba-tec-corp" target="_blank" data-smartkarma-citation="entities:17697:1" rel="noopener">Toshiba Tec (6588 JP)</a>  stock price is stuck in limbo, 17% below the 52-week high, when speculation was rife that parent Toshiba would fully consolidate its Retail and Printing subsidiary. That Toshiba Tec (TT) was not included in the plan which brought-in NuFlare, Toshiba Plant and Nishishiba Electric, leaves a good deal of ambiguity for shareholders. The Covid-19 impact adds yet more uncertainty, not only for the earnings outlook, but also for Toshiba’s eagerness to fund further acquisitions. Shareholders may just have to wait. 
Ascribing probabilities to three scenarios – Status Quo, Buy-in, and Third-Party Sale – results in a weighted average valuation of ¥3,500 for the stock. As such, this note is tagged “bearish”. 
Status Quo is the most likely scenario over the next 12-24 months. In such a case, any lingering acquisition premium may drain from the stock. Meanwhile, poor corporate governance and comparisons with US peer, <a href="https://www.smartkarma.com/entities/zebra-technologies-corp" target="_blank" data-smartkarma-citation="entities:10413:1" rel="noopener">Zebra Technologies Corp (ZBRA US)</a> , are reasons for a lack of optimism around the core Retail Solutions business. 
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The Toshiba Tec (6588 JP)  stock price is stuck in limbo, 17% below the 52-week high, when speculation was rife that parent Toshiba would fully consolidate its Retail and Printing subsidiary. That Toshiba Tec (TT) was not included in the plan which brought-in NuFlare, Toshiba Plant and Nishishiba Electric, leaves a good deal of ambiguity for shareholders. The Covid-19 impact adds yet more uncertainty, not only for the earnings outlook, but also for Toshiba’s eagerness to fund further acquisitions. Shareholders may just have to wait. 
Ascribing probabilities to three scenarios – Status Quo, Buy-in, and Third-Party Sale – results in a weighted average valuation of ¥3,500 for the stock. As such, this note is tagged “bearish”. 
Status Quo is the most likely scenario over the next 12-24 months. In such a case, any lingering acquisition premium may drain from the stock. Meanwhile, poor corporate governance and comparisons with US peer, Zebra Technologies Corp (ZBRA US) , are reasons for a lack of optimism around the core Retail Solutions business. 


Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

Technology Select Sector SPDR / Technical Analysis

The S&amp;P 500 remains just short of formidable resistance at its 200-day MA. Yet, there are signs of continued breadth improvement.  Technology in particular continues to top our Sector RSR rankings, fueled by strengthening price and RS action for semiconductors, semi-suppliers, and numerous Software groups. Last week we upgraded our weighting for Technology and its strength continues to broaden out. In this week's report we highlight a number of actionable Technology stocks across our various Groups.

The S&amp;P 500 remains just short of formidable resistance at its 200-day MA. Yet, there are signs of continued breadth improvement.  Technology in particular continues to top our Sector RSR rankings, fueled by strengthening price and RS action for semiconductors, semi-suppliers, and numerous Software groups. Last week we upgraded our weighting for Technology and its strength continues to broaden out. In this week's report we highlight a number of actionable Technology stocks across our various Groups.

U.S. Tech Stocks Are Leading Market Higher.

United States

Zebra Technologies Corporation designs and manufactures enterprise mobile computers, advanced data capture devices, such as laser, 2D and RFID scanners and readers, and specialty printers for barcode labeling and personal identification. The Company also produces WLAN products, real-time location systems, related supplies and application software.

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Zebra Technologies Corp (ZBRA US)

Toshiba Tec - Stuck in Limbo

The Toshiba Tec (6588 JP) stock price is stuck in limbo, 17% below the 52-week high, when speculation was rife that parent Toshiba would fully...

Mark Chadwick

U.S. Tech Stocks Are Leading Market Higher.

The S&P 500 remains just short of formidable resistance at its 200-day MA. Yet, there are signs of continued breadth improvement. Technology...

Vermilion Research

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