Fanuc (6954): Goldman Sachs maintains Sell on Fanuc after cutting its target price to ¥4,600.

Overview

Goldman Sachs retains a Sell rating on Fanuc, arguing that ongoing procurement difficulties are unusually company-specific and could weaken its competitive position. The firm reduces earnings estimates and valuation assumptions, lowering the 12-month target price to ¥4,600 from ¥5,600.

Core views

Goldman Sachs argues that Fanuc’s supply constraints differ materially from past cycles. Its share price had fallen 22% over the preceding three months, versus TOPIX up 3%, the average of its Japan industrials coverage down 12%, and the FA-sector average down 14%. The decline followed first-quarter results in which production constraints and component-procurement difficulties surprised investors. Since Fanuc has provided no subsequent disclosure, the pace of resolution remains unclear. The report’s channel checks across the factory-automation supply chain indicate that Fanuc’s procurement difficulties continue, with no evidence that conditions are improving. Although Fanuc orders appear strong, production and shipments are said to remain weak. In contrast, Mitsubishi Electric, Syntec and other competing CNC suppliers reportedly have positive order, production and shipment commentary and no notable procurement disruption. Goldman Sachs therefore views the issue as company-specific rather than an industry-wide shortage, raising the prospect of customer dual sourcing and a loss of Fanuc market share. The report contrasts the current episode with the 2014-15 tightening in Robodrills and CNCs, when a surge in smartphone-casing-machining demand constrained supply but Fanuc could respond through hiring and longer operating hours. The current constraint originates in supply and procurement, which Goldman Sachs believes is not readily addressed through short-term self-help. It also differs from the COVID period, when FA suppliers broadly faced similar problems. The firm sees mainland China, a major earnings pillar, as the area where competitive erosion could become most visible and warns that the business could move toward managed contraction. Goldman Sachs revises its assumptions for sustained component shortages and cost inflation across ICs, memory and PCBs, while judging Fanuc less able than in the past to impose aggressive price increases given share and volume trends. It now forecasts operating profit of ¥235 billion for FY3/27, ¥195 billion for FY3/28 and ¥180 billion for FY3/29, compared with prior forecasts of ¥236 billion, ¥201 billion and ¥186 billion. The forecast still assumes orders peak in 1Q FY3/27 and then decline gradually; the expected profit decline through FY3/29 reflects cost pressure and market-share risk rather than a further deterioration in end-demand conditions. For 2Q FY3/27, the report forecasts orders of ¥247 billion, up 20% year on year but down 12% quarter on quarter, sales of ¥234 billion and operating profit of ¥55 billion. Goldman Sachs expects attention to focus on whether production constraints have eased, whether orders have been affected and how Fanuc revises its FY3/27 operating-profit guidance of ¥218 billion. Its FY3/27 operating-profit forecast is around 8% above company guidance, which it attributes to conservative foreign-exchange and cost assumptions embedded in management guidance. Valuation is reduced alongside the earnings changes. Goldman Sachs cuts its fair machinery-sector EV/EBITDA multiple to 9x from 10x, lowers Fanuc’s sector-relative premium to 60% from 70%, and shifts the valuation base forward six months to the average of FY3/28 and FY3/29. Applying the 9x sector multiple and 60% premium produces a 12-month target price of ¥4,600, down from ¥5,600 and implying 18% downside to the stated current share price. The firm therefore retains Sell on a coverage-relative basis.

Analysis framework

Goldman Sachs combines supply-chain channel checks with comparisons against prior Fanuc supply episodes and current competitor conditions to assess whether the disruption is company-specific. It then incorporates component-cost and pricing assumptions into earnings forecasts, before valuing Fanuc on average FY3/28-FY3/29 EV/EBITDA using a sector multiple and a company-specific premium.

Methodology notes

• Industry AnalysisUpstream-Midstream-Downstream Transmission

  Factory-automation supply-chain channel checks

  The report uses feedback from trading companies and suppliers to assess how component procurement constraints are affecting Fanuc’s production and shipments relative to competitors.

• Valuation methodsEV/EBITDA valuation

  Sector-relative EV/EBITDA valuation

  The target price applies a 9x machinery-sector EV/EBITDA multiple and a 60% relative premium to Fanuc, based on average FY3/28-FY3/29 earnings.

Asset mapping & comparison

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

• Fanuc (6954.T)

  Primary covered company; procurement constraints and potential market-share loss underpin the Sell rating.

  Strengths

  Orders are described as strong, and the company has historically held a top-tier position in factory automation.

  Weaknesses

  Production and shipments remain constrained by procurement difficulties; the report sees reduced ability to pass through costs.

  Comparison

  Mitsubishi Electric and Syntec are reported to have more favorable order, production, shipment and component-procurement conditions.

  Risks

  Potential market-share loss, customer dual sourcing and competitive erosion, especially in mainland China.

Key data

• 12-month target price¥4,600Cut from ¥5,600; implies 18% downside to the stated current share price.
• Current share price¥6,023Price as of the 24 September 2026 close.
• Three-month share-price performance-22%Versus TOPIX +3%, Japan industrials coverage average -12%, and FA-sector average -14%.
• FY3/27 operating profit forecast¥235 billionPreviously ¥236 billion.
• FY3/28 operating profit forecast¥195 billionPreviously ¥201 billion.
• FY3/29 operating profit forecast¥180 billionPreviously ¥186 billion.
• 2Q FY3/27 orders forecast¥247 billion+20% year on year and -12% quarter on quarter.
• Sector EV/EBITDA multiple9xReduced from 10x.
• Fanuc sector-relative premium60%Reduced from 70%.

Impact & implications

The report sees persistent procurement constraints as a threat to Fanuc’s production, shipments and competitive moat, particularly if customers expand dual sourcing. Lower profit expectations and a reduced valuation premium underpin Goldman Sachs’ continued Sell view.

Risks

• Upside risks include FA-business sales recovering above past peaks.
• Robot-business margins could improve more than expected.
• Share buybacks or other actions to strengthen shareholder returns could support the shares.

What to watch

• Whether production constraints ease relative to 1Q FY3/27.
• The impact of constraints on orders and shipments.
• Any revision to Fanuc’s FY3/27 operating-profit guidance of ¥218 billion.
• Evidence of market-share loss or customer dual sourcing, particularly in mainland China.