It doesn't look like the rise in shares of Canon Inc (NYSE:CAJ) will be slowing down anytime soon. Analysts and investors may have expected higher guidance from Canon for the current fiscal year but that hasn't stopped upgrades and sustained buy interest.
Canon's ordinary shares (Tokyo: 7751) gained 3.24% overnight in Tokyo to close at 8,930 yen -- a new all-time high -- and were up as much as 4.28% at 9,020 yen intra-day, largely based on a report by Goldman Sachs (NYSE:GS) that revised upwards its full-year earnings estimate because of "greater-than-expected digital camera margins and higher sales of laser printers and copiers." (Source: Bloomberg.com)
• Goldman now forecasts the same net income as Canon projected (432 billion yen) for the year ending December 31st
• Goldman raised its net income forecast for 2007 from 424.3 billion yen to 466.7 billion yen
• Goldman analyst Shin Horie maintained his "outperform" neutral risk-rating on Canon
A Reuters article mentioned that Goldman Sachs said "currency fluctuations would have a limited impact on its [Canon's] earnings." I was actually concerned about Canon's forward currency exchange forecast rate of Y117/US$1 for the year since the Yen has already strengthened to the 112 level -- is currently trading in the mid-113 range -- and is expected to maintain its strength over the dollar. Goldman's stance reflects that of John Christy of Forbes International Investment Report and the Borderless Investor who discussed the media's misinterpretation of FOREX effect on major Japanese exporter companies in a post entitled "Currency Confusion."
I calculate Canon's full year 2006 earnings per share to be 486.07 yen, resulting in a forward P/E of 18.37 versus a trailing P/E of 20.63.
CAJ 1-yr chart: