Key insights
- Morgan Stanley initiated coverage of IHI Corp. with an Equalweight rating, citing potential growth in aerospace and defense but also near-term risks from higher jet fuel prices and softening aviation demand. While their FY27 profit forecast is above consensus due to a real estate sale, the report highlights potential headwinds for the aviation sector, which could indirectly impact US aerospace companies.
Investing.com - Morgan Stanley initiated coverage on IHI Corp. (7013:JP) (OTC:IHICY) with an Equalweight rating and set a price target of JPY3,150.00. The company, which commands a $20.8 billion market cap, trades at a P/E ratio of 26.78 and has delivered a remarkable 68.6% return over the past year. According to InvestingPro analysis, the stock currently appears overvalued relative to its Fair Value—a concern echoed in the platform’s comprehensive list of Most Overvalued stocks.
The firm estimates the defense business will contribute 10% of fiscal year 2027 operating profit, with growth centered on rocket motors. Morgan Stanley expects earnings improvement through resilient longer-term demand for civil aircraft engines and the rollout of new engines.
The firm noted that near-term aviation demand may soften and engine utilization could fall amid higher jet fuel prices linked to the Middle East. The aerospace segment and nuclear power business could attract attention as key growth drivers in the next medium-term plan.
Morgan Stanley’s fiscal year 2027 profit forecast is above consensus, mainly reflecting the already-announced sale of investment real estate.
IHI Corp. manufactures aerospace equipment, industrial machinery, and infrastructure systems in Japan and internationally.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.