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JPMorgan Chase Downgrades Canon’s Rating

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Jan. 8 2016, Updated 5:28 p.m. ET

Canon’s price movement

Canon (CAJ) has a market cap of $38.4 billion. After JPMorgan Chase downgraded the stock from “overweight” to “neutral,” Canon fell by 3.0% to close at $28.45 per share on January 7, 2016. Its price movement on a weekly, monthly, and YTD (year-to-date) basis is -6.5%, -6.7%, and -5.6%, respectively.

Technically, the stock has broken the support and is trading below all moving averages. Currently, Canon is trading 6.2% below its 20-day moving average, 6.0% below its 50-day moving average, and 12.1% below its 200-day moving average.

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The Guggenheim Defensive Equity ETF (DEF) invests 1.0% of its holdings in Canon. The ETF tracks an index that aims to outperform in down markets while maintaining upside potential. The equal-weighted index picks 100 US stocks using fundamental and dividend screens. The YTD price movement of DEF is -1.3% as of January 6, 2016.

Canon’s competitors and their market caps are:

  • HP (HPQ) – $19.3 billion
  • Kyocera (KYO) – $16.9 billion
  • Xerox (XRX) – $10.0 billion

JPMorgan Chase rates Canon

JPMorgan Chase has downgraded Canon stock from “overweight” to “neutral.” The company has forecast slowness in China and other Asian countries for fiscal 4Q15. On January 7, 2016, China lowered the guidance for the yuan and the company is facing difficulty in forecasting the consumer demand for this segment.

Canon’s performance in fiscal 3Q15

Canon (CAJ) reported fiscal 3Q15 net sales of 925.8 billion Chinese yuan, a rise of 6.1% from the net sales of 872.2 billion yuan in fiscal 3Q14. In fiscal 3Q15, its net income and EPS (earnings per share) fell to 49.2 billion yuan and 45.03 yuan, respectively, from a net income and EPS of 58.3 billion yuan and 52.67 yuan, respectively, in fiscal 3Q14.

Meanwhile, in fiscal 3Q15, its cash and cash equivalents fell by 31.2% and inventories rose by 12.7% from fiscal 4Q14. Its debt-to-equity ratio fell to 0.41 in fiscal 3Q15 from a debt-to-equity ratio of 0.42 in fiscal 4Q14. Canon’s PE (price-to-earnings) and PBV (price-to-book value) ratios are 17.0x and 1.3x, respectively, as of January 7, 2016.

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