Harmonic Drive Systems Inc

6324: XTKS (JPN)

Morningstar Rating for Stocks	Fair Value	Economic Moat	Capital Allocation
	¥‎9,337.00	Xsmd	Lnrmtyqxq

Harmonic Drive Earnings: Expecting Gradual Margin Recovery for 2024; Guidance Is Conservative

Jason Kondo

May 15, 2024

Despite the revenue guidance being in line with our estimate, wide-moat Harmonic Drive Systems, or HDS, guided for a 4.6% operating margin for fiscal 2024 (ending March 2025), up from 0.2% in fiscal 2023, but below our previous assumption of 9.0%, as we had assumed stronger margin recovery from improved capacity utilization. While we expect further details to be provided in the upcoming earnings call, we think the guidance is conservative, as HDS will be able to realize cost pass-throughs by leveraging its pricing power.

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