CAJ short pitch:
– Canon, the maker of printers and cameras, is one of the last remaining consumer electronic covid over-earners that have yet to crack.
– Structurally declining, disadvantaged behemoth whose decline has been masked by temporary pricing benefits that are in the process of reversing.
– Product prices reverting in both printer and camera segments.
– Management is overoptimistic and has a history of missing targets.
– EPS for 2023 is expected to be 33% below consensus.
– The glut of printer inventory and the pricing under pressure.
– Canon is a long-term short that should materially underperform the indexes over the next several years.
– Trades at 17x 2023 EPS.
– At a 12.5x multiple, the fair price target at $17/share.
Exp. gain: 25% in short term and 40% over a longer term
Full write-up (free guest account required):