Key Takeaways:
JPMorgan cut its Kioxia price target 16% to ¥130,000 while raising profit forecasts, saying valuation hinges on long-term agreements stabilizing pricing.
"Valuation re-rating still needs time until the stabilizing effect is verified in actual results," JPMorgan analysts said in a report dated Aug. 10. The bank kept its Overweight rating but trimmed the target price-to-earnings multiple to about nine times from roughly 11 times, returning it to the 15-year historical average for global memory makers.
JPMorgan raised its FY2027 operating profit estimate to ¥800.2 billion from ¥741.9 billion, FY2028 to ¥1.12 trillion from ¥1.06 trillion, and FY2029 to ¥1.46 trillion from ¥1.39 trillion. The bank pushed back its expected consumer NAND price decline to the fourth quarter of 2027 from the third, and lifted its enterprise SSD average-price assumption after a stronger-than-expected second-quarter recovery. It left bit-shipment forecasts broadly unchanged.
Kioxia shares have fallen about 56 percent from their record high. The company announced an up to ¥800 billion buyback — its first large-scale repurchase in the storage industry — after first-quarter net profit jumped to ¥842.2 billion from ¥18.3 billion a year earlier. The stock rose 17.7 percent the day the plan was announced.
The buyback, equivalent to roughly 19 percent of Kioxia's market value, follows Bain Capital's full exit in early July at a total return of about $17 billion. JPMorgan expects free-cash-flow yields of 13 percent, 27 percent and 37 percent for fiscal 2026 through 2028, and assumes payout ratios of 10 percent, 30 percent and 50 percent, implying total shareholder returns of about 4 percent, 8 percent and 18 percent.
Kioxia plans to introduce multi-year long-term agreements from 2027, targeting 50 percent coverage by 2028. JPMorgan said the contracts' enforceability and ability to smooth pricing will determine their credibility, and flagged the GP product line — an SLC-based high-IOPS series that consumes three to four times the die capacity of TLC or QLC — as a potential supply-tightening factor. The bank expects enterprise SSD total addressable market to exceed 820 exabytes in 2026, up about 55 percent year over year.
The target cut signals JPMorgan sees limited near-term upside until LTA contracts show results, even as earnings momentum stays strong. Investors will watch Kioxia's GP-series customer sampling, planned for late 2026, and the buyback's execution through Oct. 30.
This article is for informational purposes only and does not constitute investment advice.
