Nomura Stock Upgraded to Buy by BofA as Stronger ROE and Earnings Growth Boost Outlook

BofA Securities has upgraded Nomura Holdings Inc. (TYO: 8604) to Buy from Neutral, while raising its price target to ¥1,650 from ¥1,490, citing stronger earnings quality, improving profitability, and a more sustainable return on equity (ROE) outlook.

The brokerage believes Nomura is benefiting from steady expansion across its wealth management and investment banking operations, creating a more balanced earnings profile that is less dependent on volatile trading activity. This shift toward recurring revenue streams has strengthened confidence in the Japanese financial group's long-term growth prospects.

BofA expects Nomura to report first-quarter net profit of approximately ¥108.2 billion, marking a significant improvement from the previous quarter. The projected earnings recovery is expected to be driven by higher equity-method income, stronger trading revenue, and the absence of several one-off charges that weighed on fourth-quarter financial results.

According to the brokerage, Nomura is now capable of sustaining an underlying return on equity of around 11%, a level that supports a higher valuation multiple. While investment banking earnings can fluctuate alongside market conditions, BofA noted that the company's recent profit growth has become increasingly supported by recurring income sources, including asset-based fees, wealth management services, and advisory and investment banking operations.

BofA estimates Nomura will deliver an annualized first-quarter ROE of 11.6%, or approximately 10.8% excluding one-time gains. If achieved, this would represent the third straight quarter in which adjusted ROE remains close to the 11% mark, reinforcing the bank's confidence in the sustainability of the firm's profitability.

Reflecting this improved outlook, BofA also increased its earnings-per-share forecasts for fiscal years 2027 through 2029, citing expectations for stronger performance in both trading and asset management businesses.

The brokerage added that if first-quarter earnings meet its projections, Nomura's first-half dividend could reach ¥31 per share, providing an attractive dividend yield compared with many insurance-sector peers despite the stock's recent gains.

In addition to dividend growth, BofA expects Nomura to announce another share buyback later in the current fiscal year, although it does not anticipate such a program being unveiled alongside the company's upcoming first-quarter earnings report.

The upgrade underscores growing confidence that Nomura's diversified revenue mix, improving capital returns, and disciplined earnings growth strategy position the company for continued shareholder value creation as Japan's financial sector continues to evolve.