Murata Manufacturing: 1Q results may exceed expectations, 60-day tactical bullish view

Overview

This is a Morgan Stanley tactical view report on Murata Manufacturing (6981.T), a Japanese equity. The report's core conclusion is that the company's upcoming 1Q F3/27 results are likely to exceed market expectations and may drive the share price to outperform the Japanese index over the next 60 days.

Core views

The report forecasts 1Q F3/27 operating profit of ¥90.4bn, significantly above ¥61.6bn in the same period last year and ¥78.8bn in the previous quarter, as well as the FactSet consensus estimate of ¥85.6bn. Morgan Stanley assesses the subjective probability of this positive scenario at 80%+ and maintains its Overweight rating.

Analysis framework

The analysis focuses primarily on short-term earnings catalysts, gaps between market expectations and results, and the framework for the stock rating and target price. The report identifies the 1Q F3/27 results announcement at 14:00 on July 31 as a key event and judges that an earnings beat could support a positive share-price reaction after the announcement.

Methodology notes

• Valuation MethodDCF

  Base-case and DCF valuation

  The target price is derived from the base case and DCF model, with key assumptions including a 2.6% risk-free rate, a 1.09 equity beta, a 3.2% risk premium, a 6.1% WACC, and zero growth after F3/36.

• Tactical ViewResearch Tactical Idea

  60-day relative-return view

  The report expects Murata Manufacturing's share price to outperform the Japanese index over the next 60 days; this view may differ from the long-term rating due to differences in time horizon, methodology, or market events.

• Rating SystemMorgan Stanley Stock Rating

  Overweight / In-Line

  Overweight indicates that risk-adjusted total returns over the next 12-18 months are expected to exceed the average for the analyst's industry coverage; In-Line indicates that industry performance is expected to be broadly in line with the relevant benchmark.

Asset mapping & comparison

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

• Murata Manufacturing (6981.T)

  Core covered security

  Strengths

  The 1Q F3/27 operating profit forecast is above consensus, providing an earnings catalyst; MLCCs, RF devices, and MetroCirc products may benefit from high-end smartphone demand.

  Weaknesses

  The company's core products are widely used in electronic devices, making demand and average selling prices relatively sensitive to changes in the global economy.

  Comparison

  The report expects short-term share-price performance to outperform the Japanese national index; the industry view is In-Line.

  Risks

  Weaker-than-expected high-end smartphone demand, global economic volatility, and currency fluctuations could all weigh on earnings and share-price performance.

Key data

• 1Q F3/27 operating profit forecast¥90.4bnAbove ¥61.6bn in the same period last year, ¥78.8bn in the previous quarter, and the FactSet consensus estimate of ¥85.6bn.
• Tactical view probability80%+The report describes this scenario as highly likely; the probability is a subjective estimate.
• Target price￥12,500Based on the base case and DCF model.
• Closing price￥9,212As of 2026-07-07, with the currency being JPY.
• Implied upsideApproximately 35.7%Estimated based on the target price of ￥12,500 and the closing price of ￥9,212.
• Market capitalization￥16,768.5bnBase market capitalization disclosed in the table.
• Average daily trading value￥50.2bnAverage daily trading value disclosed in the table.
• FX sensitivityA ¥1/$ change affects OP by approximately ¥4.5bnOperating profit sensitivity disclosed in the report.

Impact & implications

If 1Q results exceed market expectations as forecast in the report, this could strengthen market confidence in Murata Manufacturing's earnings recovery and demand related to high-end smartphones in the short term, thereby supporting share-price outperformance versus the Japanese index.

Risks

• High-end smartphone demand may be weaker than expected.
• Changes in the global economy could cause significant volatility in electronic-device demand and product average selling prices.
• Currency fluctuations could affect operating profit; the report estimates that a ¥1/$ change affects OP by approximately ¥4.5bn.
• Morgan Stanley may have investment-banking or other commercial relationships with covered companies, and investors should be aware of potential conflicts of interest.

What to watch

• The 1Q F3/27 results announcement scheduled for 14:00 on July 31, 2026.
• Whether 1Q operating profit reaches or exceeds the ¥90.4bn forecast.
• The gap between the FactSet consensus estimate and actual results.
• The extent to which high-end smartphone demand drives sales of MetroCirc, MLCCs, and RF devices.
• The impact of changes in the Japanese yen-to-U.S. dollar exchange rate on operating profit.