We believe the sharp appreciation of the yen is eroding Canon’s (CAJ) revenue and profits. The company expects to improve profitability through product launches and cost-cutting efforts.

The company also lowered its revenue forecast but earnings forecast remained unchanged for the full year 2009, which is still below the 2008 level. We expect revenue in 2009 to be hurt by weak consumer spending and worsening global economy and believe the company will struggle to meet expectations in fiscal 2009.

We maintain our estimates for the full year 2009. We also maintain our Sell recommendation on CAJ shares but increased our six-month target price to $30.00.

Zacks Investment Research
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