Ajinomoto (TYO:2802) Price target raised by 11.33% to 5,678.85

The average price target for Ajinomoto has been revised to 5,678.85 yen per share, representing a significant increase of 11.33% from the previous estimate of 5,100.93 on June 1, 2023.

This figure results from the average of several targets provided by analysts, with ranges oscillating from a minimum of 3,939.00 to a maximum of 7,350.00 yen per share. Interestingly, the average target represents a slight decrease of 0.27% from the last reported closing price of 5,694.00 yen.

I find it interesting that while analysts raise their expectations, Ajinomoto's dividend yield remains a modest 1.32%. Its dividend payout ratio is 0.41, which means they distribute less than half of their earnings. This suggests a prudent strategy, retaining capital for future investments instead of attracting investors with inflated dividends.

The 3-year dividend growth rate is 1.31%, demonstrating a steady but not particularly aggressive increase. As an investor, I would prefer to see a greater commitment to increasing dividends, especially considering their conservative payout ratio.

Regarding institutional sentiment, there is a 2.94% increase in the number of institutional owners in the last quarter. Shares held by institutions increased by 1.71% to 64,685,000 shares. The average weight in portfolios dedicated to Ajinomoto grew by 1.32%, standing at 0.20%.

Several important funds have modified their positions: one increased its stake by 3.92%, another significantly increased by 26.62%, while others have slightly reduced their positions. This mix of movements makes me question whether there is really a consensus on the company's future.

In my opinion, the price target increase seems somewhat disconnected from the modest growth of dividends and the mixed behavior of institutional investors. Does Ajinomoto really justify this new valuation or are we facing another case of analysts' exaggerated optimism?