Overview

Citi reduced its price target for Mitsubishi Electric Corp to ¥7,200, down from ¥7,600, while maintaining a buy recommendation. The firm highlighted that the stock is trading at a fiscal year 2028 price‑to‑earnings (P/E) multiple of 17 times, suggesting attractive valuation.

Valuation and Target Multiples

The new target price of ¥7,200 corresponds to a FY2028 forward P/E of 24.2 times, which is 12% lower than the previous target multiple. This calculation is based on an earnings‑per‑share (EPS) forecast of ¥297.9 for FY2028, representing a 7% increase from Citi’s earlier EPS estimate.

Operating Profit Forecasts

Citi projects Mitsubishi Electric’s FY2027 operating profit at ¥705.0 billion, a 63% year‑over‑year increase and roughly 8% above the consensus estimate of ¥654.6 billion. For FY2028, the bank expects adjusted operating profit of ¥762.0 billion.

Quarterly Outlook

The analyst estimates second‑quarter operating profit of ¥167.5 billion, which is 49% higher than the same quarter a year earlier and about 6% above the consensus estimate of ¥157.9 billion.

Earnings Drivers

Factory automation remains the primary earnings driver, with Citi assuming order growth of approximately 40%‑50% year‑over‑year, similar to the first quarter. Additional contributions are expected from infrastructure and semiconductor segments.

Procurement and Currency Risks

Citi notes limited material‑procurement risk for the factory automation business because Mitsubishi Electric sourced key inputs at the start of the fiscal year. The bank’s foreign‑exchange assumptions are ¥155 per US dollar and ¥185 per euro. While recent yen appreciation creates a headwind, the impact is deemed limited; a ¥5 appreciation against both the dollar and euro would reduce FY2028 adjusted operating profit by ¥13.0 billion, equivalent to 1.7% of the projected ¥762.0 billion.

Expected Guidance Revisions and Corporate Actions

Citi anticipates upward revisions to guidance when second‑quarter results are released in late October, expecting adjusted operating profit to be revised to a range of ¥670 billion‑¥700 billion. The bank also expects announcements regarding the divestiture of Mitsubishi Electric’s automotive equipment business and a share‑buyback programme totaling ¥150 billion.