Canon, Inc. (CAJ)

We believe the sharp appreciation of the yen is eroding Canon's (CAJ - Analyst Report) revenue and profits. The company expects to improve profitability through product launches and cost-cutting efforts, and Canon has maintained its revenue and earnings forecast even though the third quarter was below expectations.

We expect revenue in 2009 to be hurt by weak consumer spending and the poor global economy, and believe the company will struggle to meet expectations in fiscal 2010. We maintain our estimates for the full year 2009. 2011 estimates have been added.

We also maintain our Underperform recommendation on CAJ shares, but increased our six-month target price to $30.00.