Senior Technology Analyst, Japanese Equities, LightStream Research

Scott Foster

Securities analyst covering electronics, precision equipment & robotics, engineering, construction, transport and other sectors for more than 25 years in Japan and 3 years in Korea. Permanent resident of Japan.

Senior Technology Analyst, Japanese Equities

Advantest (6857 JP): High Gearing on the Downside

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Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

Equity Bottom-Up

<ul>
<li>FY Mar-24 guidance - sales down 14%, operating profit down 37% - is not extreme compared with previous cycles. </li>
<li>History shows that downturns at Advantest can last for two or even three years, not just one. Weak economic conditions add to this possibility.</li>
<li>The share price has rebounded from the recent sell-off, but optimism is unwarranted. Historical valuation ranges suggest potential downside of 20% or more.</li>
</ul>


FY Mar-24 guidance - sales down 14%, operating profit down 37% - is not extreme compared with previous cycles. 
History shows that downturns at Advantest can last for two or even three years, not just one. Weak economic conditions add to this possibility.
The share price has rebounded from the recent sell-off, but optimism is unwarranted. Historical valuation ranges suggest potential downside of 20% or more.


Advantest (6857 JP): 20% Potential Downside

Advantest Corp

Advantest (6857 JP): 20% Potential Downside