Yaskawa Electric: Fair Value Cut 5% Reflecting Short-Term Motion Control Segment Weakness

Wide-moat Yaskawa Electric announced guidance of JPY 550 billion in revenue and JPY 60 billion in operating profit for fiscal 2025, far below the targets of JPY 650 billion in revenue and JPY 100 billion in operating profit in the current medium-term plan set in May 2024. The guidance revision is primarily based on a lower recovery trajectory for AC servo than expected. End markets such as machine tools and semiconductor equipment remain stagnant amid global tariff turmoil. We trimmed our revenue assumption for the motion control segment to JPY 250 billion from JPY 289 billion during fiscal 2025, and meaningful growth for the segment will happen after fiscal 2026. As a result, we cut our fair value estimate for Yaskawa to JPY 5,300 from JPY 5,600, reflecting the near-term revision of the motion control segment. Yaskawa shares plunged 20% on April 7 amid the tariff fallout, with the Nikkei 225 index meltdown at nearly 8%. We believe Yaskawa’s shares are undervalued as our long-term outlook for the firm’s competitive servo and robotics businesses remains unchanged.