Citigroup Reiterates Buy Rating, $17.60 PT on Sony Corporation on ADRs

In a report published Wednesday, Citigroup reiterated its Buy rating and $17.60 price target on Sony Corporation SNE. Citigroup noted, “Sony continues to be affected by the growth slowdown in digital consumer electronics but we expect management to take more proactive strategies with the weakening yen. We also forecast that Sony can take back some market share. We see margins rising even if sales are flattish thanks to cost structure improvement. We forecast a new growth phase for the smartphone business. The rollout of new products is going smoothly and client telecom operators are also eager to market them, so we expect expansion in both regional breadth and depth. Sony is progressing with the restructuring we think is necessary. We do not think it is in the final stages yet, but it has set to work on business selection and disposal and is also pushing asset restructuring. The sort of balance sheet risk represented by a ADR price far below book has already receded, in our view. The impressive reputation Sony has for its brand power and marketing muscle is not dead yet. The management team are also equipped with leadership abilities and speed in decision-making. We also think that the globalized corporate culture gives Sony international competitiveness. If Sony were to announce additional restructuring focused on the balance sheet and SG&A expenses, earnings could rise further and the market's take on the shares enter a new phase.” Sony Corporation closed on Tuesday at $15.83.