JPMorgan Raises SCREEN’s Target Price to 18,000 Yen, Optimistic About DRAM Market Share Growth

Overview

JPMorgan released an earnings model update report for SCREEN Holdings, maintaining an overweight rating and significantly raising the target price from 11,500 yen to 18,000 yen (as of December 2026). The report revised earnings forecasts based on recent developments, highlighting the company’s strong prospects for increasing its market share in the DRAM sector and solid investment from wafer fab customers.

Core views

Significant Earnings Forecast Upgrade: The report raised the FY2026 operating profit forecast from 151 billion yen to 166.5 billion yen (up 36% year-on-year), and the FY2027 forecast from 168 billion yen to 203.5 billion yen (up 22% year-on-year), introducing for the first time a FY2028 forecast of 234.6 billion yen (up 15% year-on-year). Projected CAGR for operating profit from FY2025-28 is expected to reach 24%. DRAM Business Becomes Core Driver: Although DRAM applications account for only 12% of the company’s FY2025 semiconductor production equipment (SPE) sales, lower than competitors Tokyo Electron (31%) and Kokusai (30%), the report argues that this gap is one of the reasons behind the valuation discount. As DRAM technology advances and cleaning processes become more challenging, SCREEN is expanding its DRAM market share and is expected to narrow the gap with competitors. Wafer Fab Business Short-Term Adjustment Does Not Change Long-Term Trend: For FY2026, the report lowered the outlook for wafer fab applications, expecting adjustments in the first half of the year, with demand shifting toward the second half of fiscal year 2026. However, in the long term, major wafer fab customers remain strongly committed to investing, ensuring SCREEN’s continued strength in the wafer fab market, while also benefiting from technological shifts as logic chips move from FinFET to nanosheets and NAND flash memory migrates from CUA to CBA.

Analysis framework

The report adopts a bottom-up earnings forecasting approach, first breaking down semiconductor production equipment (SPE) revenue contributions by application area (Foundry, Logic, Memory, etc.), with a focus on analyzing how changes in DRAM market share affect the overall revenue structure. Second, it combines analysis of technology iteration cycles (such as process migration in logic and storage chips) to assess the sustainability of equipment demand. Finally, at the valuation level, it uses the P/E ratio method based on the FY2027 earnings per share forecast and assigns a valuation multiple above the historical average to reflect stronger growth prospects in the semiconductor equipment market and the company’s improved market share logic.

Methodology notes

• Valuation MethodPE/PEG valuation

  Price-to-Earnings Valuation

  The report assigns a target valuation of 22.5 times the P/E ratio based on the FY2027 earnings per share forecast, a multiple higher than the historical average of 15 times, reflecting improved growth prospects and the correction of valuation discounts.

• Industry/Industrial Analysis FrameworkIndustry Concentration Analysis

  Market Share Comparison Analysis

  By comparing SCREEN’s sales share in DRAM applications with those of competitors (Tokyo Electron and Kokusai, 12% vs. over 30%), the report analyzes the company’s potential for market share growth and the logic behind valuation recovery.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• SCREEN Holdings (7735.T)

  Beneficiary

  Strengths

  DRAM technology advancements increase the difficulty of cleaning processes, favoring the company’s market share expansion

  Weaknesses

  Low DRAM application share, currently only 12%, below major competitors

  Comparison

  Competitors Tokyo Electron and Kokusai have DRAM application shares of 31% and 30% respectively

  Risks

  Tightening export restrictions and intensifying competition leading to margin deterioration

Key data

• Target Price (December 2026)18,000 yenPreviously 11,500 yen
• FY2026 Operating Profit Forecast166.5 billion yenRaised from 151 billion yen, up 36% year-on-year
• FY2027 Operating Profit Forecast203.5 billion yenRaised from 168 billion yen, up 22% year-on-year
• CAGR of Operating Profit from FY2025-2824%Based on capturing DRAM demand and wafer fab customer investments
• DRAM Application Sales Share (FY2025)12%Lower than competitors Tokyo Electron (31%) and Kokusai (30%)
• Valuation Multiple22.5x P/EBased on FY2027 earnings per share, higher than the historical average of 15x

Impact & implications

The report suggests that as profits grow and cash accumulates, the company can maintain high ROE levels through growth investments or increased shareholder returns. The rise in DRAM market share helps narrow the valuation gap with competitors, supporting the expansion of the valuation multiple from the historical average of 15x to 22.5x. If the share of cleaning equipment in total wafer fabrication equipment (WFE) and SCREEN’s share in the cleaning equipment market both increase in the medium term, this will further validate the investment logic.

Risks

• Decline in cleaning equipment market share relative to competitors
• Intensified competition leading to deteriorating profitability
• Inefficient capital allocation
• Tightening export restrictions on China

What to watch

• Change in the share of cleaning equipment in total wafer fabrication equipment (WFE) in the medium term
• Change in SCREEN’s share in the cleaning equipment market relative to competitors
• Continuity of capital equipment investment demand from major wafer fab customers