HOYA: Limited risk from low raw-material exposure in lenses; HDD and mask blanks support earnings growth

Overview

This report summarizes Goldman Sachs' core views following a conference call with HOYA's IR team on May 25, 2026. Although HOYA's share price was weak after the earnings release, Goldman believes market concerns over difficulties in procuring high-refractive-index lens raw materials have only a limited impact on the company's overall earnings; earnings growth is driven more by Information Technology businesses such as HDD glass substrates, mask blanks, and CUPO polarized glass.

Core views

Goldman's core view is that HOYA's Information Technology segment remains the main engine of earnings growth, with nearline HDD application demand, EUV blanks capacity expansion, and contributions from new customers supporting medium-term growth; the Life Care segment is growing more moderately, but eyeglass lenses, MiyoSmart myopia control lenses, sales of first-generation products in Japan, and endoscope structural reforms still provide support. The company faces rising depreciation and softer demand in some end markets, but management has a clear target of maintaining margins through sales growth, operating efficiency, and pricing strategy.

Analysis framework

The report is primarily based on notes from a conference call with HOYA's IR team, analyzing the Information Technology segment, the Life Care segment, the company's profitability, and its valuation methodology, while incorporating management guidance on FY3/27 and longer-term capacity, capital expenditure, sales growth, and OPM to assess EPS growth and the rating.

Methodology notes

• Valuation methodsSOTP

  sum-of-the-parts valuation

  Goldman Sachs derives a 12-month target price of ¥32,000 using the SOTP method, based on EV/EBITDA valuation, and applies different multiples to the Life Care and Information Technology segments.

• Valuation multipleEV/EBITDA

  enterprise value relative to EBITDA multiple

  The Life Care segment is valued at FY3/27-28E EV/EBITDA multiples of 17x/15x, while the Information Technology segment is valued at 30x/28x; the target price implies FY3/27E P/E of 39x and P/B of 11x.

• Factor frameworkGS Factor Profile

  Goldman Sachs factor profile

  Goldman Sachs' factor profile compares individual stocks with the market and industry peers across growth, financial returns, valuation multiples, and composite factors.

• M&A frameworkM&A Rank

  M&A probability ranking

  Goldman Sachs uses a 1-to-3 M&A rank to assess the probability that a covered company becomes an acquisition target; 1 indicates high probability, 2 medium probability, and 3 low probability.

Asset mapping & comparison

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

• HOYA (7741.T)

  Covered name; Goldman Sachs maintains Buy rating

  Strengths

  Strong demand for HDD glass substrates, EUV blanks, and CUPO polarized glass; management targets maintaining high margins in the Information Technology segment; the Life Care business is supported by multiple product lines.

  Weaknesses

  Growth in some sub-businesses within the Life Care segment is slowing, and guidance for contact lenses and intraocular lenses has been slightly reduced from previous levels; future large-scale investment will increase depreciation pressure.

  Comparison

  HOYA's rating is considered relative to Japanese technology and semiconductor-related companies in Goldman's coverage universe, including Advantest, DISCO, Ebara, JEOL, Kioxia Holdings, Lasertec, SCREEN Holdings, Tokyo Electron, Tokyo Seimitsu, and Ulvac.

  Risks

  Intensifying competition in core businesses, weaker demand, large-scale capital expenditure, or M&A transactions.

• HDD glass substrate business

  Growth driver for the Information Technology segment

  Strengths

  Growth in demand for 3.5-inch nearline applications, existing customer growth from Seagate, and potential incremental contributions from the second customer and the third HAMR customer.

  Weaknesses

  2.5-inch products are expected to decline by a mid-double-digit percentage, and the third customer's HAMR contribution is expected to remain limited in the short term.

  Comparison

  Growth in 3.5-inch products is significantly stronger than in 2.5-inch products.

  Risks

  Customer ramp timing, fluctuations in nearline HDD demand, and capacity expansion execution risk.

• Life Care segment

  The company's second core business segment

  Strengths

  The second-generation MiyoSmart product is expanding sales in China, first-generation products have begun selling in Japan, and endoscope structural reform should help improve profitability.

  Weaknesses

  Growth guidance for contact lenses and intraocular lenses has been slightly lowered from previous levels, and high-refractive-index lenses face tight raw material procurement.

  Comparison

  Growth is more moderate than in the Information Technology segment, with a margin target of 20%.

  Risks

  Weak demand in China, clinical results affecting regional expansion, and slower-than-expected progress in sourcing alternative raw materials.

Key data

• FY3/27 HDD glass substrate sales growthapproximately 10% YoY growth3.5-inch products are expected to post mid-double-digit growth, while 2.5-inch products are expected to decline by a mid-double-digit percentage.
• Contribution from customers in 3.5-inch nearline applicationsSeagate low-double-digit sales growth; contribution from the second customer starting in 2H3/27The second customer is expected to adopt glass substrates in models using 11 substrates per HDD; contribution from the third customer in HAMR applications is expected to begin in 2H3/28 but remain limited in scale.
• Vietnam capital expenditure¥50bnPhase 1 is expected to increase existing capacity in Vietnam and Laos by about 20%-30%.
• FY3/27 mask blanks sales growth10% or moreDUV is close to full utilization, with sales assumed to be flat; EUV blanks are expected to grow 10%-20%, driven by demand and new customers.
• Singapore capital expenditure¥42bnUsed to meet future EUV blank demand growth; Phase 1 is expected to further increase capacity by about 20%-30%.
• FY3/27 imaging business sales growthapproximately 5%-10%CUPO polarized glass is expected to grow about 15%-20%, while traditional camera applications are expected to be flat to low-single-digit growth.
• FY3/27 Life Care sales growthmid-single-digit percentageEyeglass lenses are also expected to grow at a mid-single-digit rate; contact lenses about 3%-4%, and intraocular lenses about 5%-6%.
• Underlying OPM of the Information Technology segmentabout 52%In 4Q3/26 it was reduced by about 1 percentage point due to raw material write-downs; the company targets maintaining about 52% for full-year FY3/27.
• Long-term OPM pressureabout 4-5 percentage points of downside pressureLarge-scale investment in HDD glass substrates and EUV blanks will increase the depreciation burden in FY3/30-FY3/31.
• Target price¥32,000Based on SOTP valuation, implying FY3/27E P/E of 39x and P/B of 11x.

Impact & implications

The report has positive implications for HOYA shares: market concerns over the high-refractive-index lens supply chain may be overstated, while orders, customer expansion, and capacity investment in the Information Technology segment are more important determinants of medium-term earnings leverage. If growth in HDD and EUV blanks materializes, EPS could exceed market consensus expectations; however, rising depreciation, intensifying competition, and weaker demand may still limit margin expansion.

Risks

• Intensifying competition in core businesses.
• Weaker end demand.
• Large-scale capital expenditure or M&A transactions could bring return and financial pressure.
• Capacity expansion in HDD glass substrates and EUV blanks will increase the depreciation burden in FY3/30-FY3/31, reducing OPM by about 4-5 percentage points.
• Lowered growth guidance for contact lenses and intraocular lenses in the Life Care segment indicates pressure on some demand and same-store growth.
• Although tight procurement of high-refractive-index lens raw materials is expected to have limited impact, alternative sourcing still needs to be executed.

What to watch

• Whether the approximately 10% sales growth in FY3/27 HDD glass substrates can materialize, especially demand for 3.5-inch nearline applications.
• The pace of contribution from the second customer in 2H3/27 beyond Seagate, and the volume ramp of the third HAMR customer after 2H3/28.
• The capacity ramp-up progress of the ¥50bn investment in Vietnam and the ¥42bn investment in Singapore.
• Whether EUV blanks can achieve 10%-20% growth under the influence of demand, new customers, and product mix.
• Whether the Information Technology segment can maintain OPM at about 52% before depreciation rises, and stay above 50% over the long term.
• Sales expansion of MiyoSmart in China, Europe, and Japan, and the impact of clinical results on expansion in Europe.
• Whether the Life Care segment can achieve its 20% OPM target in 3Q3/27.