Fueled by buybacks, analyst valuations, earnings expectations and IPOs, SoftBank Group Corp. shares are retracing their way back to heights last seen during the dotcom bubble 20 years ago.
SoftBank shares rose 2.3 per cent in Tokyo Tuesday to close at 6,645 yen, the highest since March 2000. The stock is up almost 150 per cent from March.
At the peak in February 2000, SoftBank reached what remains its all-time intraday high of exactly 11,000 yen. Founder Masayoshi Son has said that surge led him to surpass Bill Gates as the world’s richest man -- if only for just three days.
Some now see the stock nearing those heights again, as analysts review their assessment of Vision Fund companies.
“Expectations for SoftBank’s profit growth as an investment company have been rising after the success of recent IPOs,” said Tomoaki Kawasaki, senior analyst at Iwaicosmo Securities Co. His price target is 8,000 yen, the second-highest among analysts tracked by Bloomberg.
Tokai Tokyo Research Center analyst Masahiko Ishino, who last week trimmed his price target to 10,000 yen, is the only analyst who rates the stock higher. Ishino has rated SoftBank shares at or above the 10,000 yen mark for more than a year.
HSBC on July 22 also lifted its price target 21 per cent to 7,430 yen. “We continue to like the risk reward outlook at SoftBank,” analysts Neale Anderson and Binnie Wong wrote. “SoftBank is executing rapidly on its share buyback and debt reduction program.”
In addition to share buybacks that could be worth as much as 2.5 trillion yen (US$23.7 billion), what were once downsides are now advantages, as holdings in Uber Technologies Inc. and perhaps even WeWork are seen to contribute to earnings, according to HSBC.
SoftBank is “for better or worse, heavily exposed to the impact of the market’s excess liquidity, and we think it may be one of the firms that benefits most in the near term,” Citigroup Global Markets analysts Mitsunobu Tsuruo and Hiroki Kondo wrote on July 21.
SoftBank will report earnings on August 11. Even if the stock should reclaim 10,000 yen, Son wouldn’t now challenge for the crown of world’s richest man. But a more realistic goal is in sight -- that of Japan’s most valuable company. A share price of around 13,400 yen could see it take that title, based on Toyota Motor Corp.’s valuation.
Of course, under Son’s reckoning SoftBank is already worth far more -- his shareholder value metric, the equity value of SoftBank’s holdings minus net debt, puts its worth at 12,605 yen a share.