Investing.com – UBS initiated coverage on Shiseido Co Ltd. (4911:JP) (OTC:SSDOY) with a Neutral rating and a price target of JPY2,650.00.
The Swiss investment bank acknowledged that Shiseido’s restructuring efforts to improve profitability are showing positive results, but expressed concerns about the company’s top-line growth prospects and its 7% core operating profit margin guidance for 2026.
UBS highlighted limited revenue upside potential in Shiseido’s most profitable segments – China and travel retail – despite stabilizing market conditions. The bank also noted slowing business sales in Japan, the company’s home market.
The analysis pointed to disappointing sales performance of the Drunk Elephant brand, which is negatively impacting Shiseido’s performance in Europe, Middle East, Africa (EMEA) and the Americas regions.
Shiseido is currently trading at 9 times enterprise value to EBITDA for 2026 estimates, which UBS notes is in line with local peer-group averages and 1.5 standard deviations below Shiseido’s own historical average, suggesting that after a 40% share price correction since 2024, most headwinds are already reflected in the stock price.
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