Top Japanese Internet & Media Stocks for 2025, According to Morgan Stanley

Morgan Stanley has identified several Japanese internet and media companies positioned for strong performance despite projected economic stagnation in 2025, citing their robust growth strategies and diverse revenue streams. Recruit Holdings is their top pick, lauded for its margin improvement focus and outperforming HR Tech division, further supported by a Goldman Sachs upgrade and strategic shift towards AI. Other notable selections include Kakaku.com, anticipated for double-digit growth driven by digital transformation, and MonotaRO, upgraded to Overweight due to its dominant position in B2B e-commerce. Rakuten also features, with its mobile and e-commerce growth deemed undervalued, collectively presenting resilient investment opportunities amidst macroeconomic headwinds.

Analysis

Despite a forecast of economic stagnation for Japan in 2025, Morgan Stanley has identified specific internet and media companies with resilient fundamentals. Recruit Holdings is positioned as the top selection due to a strategic focus on margin improvement, which aims to deliver profit growth even if revenues contract, and the consistent outperformance of its HR Tech division. This view is reinforced by a Goldman Sachs upgrade to 'Buy' based on monetization at its Indeed platform and a strategic restructuring toward AI. Kakaku.com is highlighted for its projected double-digit annual growth in sales and operating profit for the next three years, driven by its restaurant digital transformation services and the outperformance of its Kyujin Box platform, which recently reported a 24% year-over-year sales increase. Morgan Stanley upgraded MonotaRO to 'Overweight', citing its dominant competitive position in the B2B MRO e-commerce market and sustained mid-term growth potential that justifies its high valuation. Finally, Rakuten is presented as undervalued, with its mobile division showing strong subscriber and profit growth, complemented by stable expansion in its e-commerce and financial services segments. This outlook is supported by recent 'Buy' and 'Overweight' ratings from Nomura and JPMorgan, respectively, both citing mobile segment prospects.

Key Decisions for Investors

• Investors should evaluate Recruit Holdings for its defensive characteristics, specifically its margin improvement plan and potential for shareholder returns, while monitoring the execution of its AI-focused pivot at Indeed and Glassdoor.
• Kakaku.com's projected double-digit growth and strong Q1 results suggest upside potential, but investors should track the sustained performance of its Kyujin Box platform as a key catalyst for meeting long-term forecasts.
• For MonotaRO, the key consideration is whether its dominant market position and consistent profit growth can continue to justify its relatively high valuation multiples, as suggested by Morgan Stanley's 'Overweight' upgrade.
• Rakuten presents a potential value opportunity, and investors should assess if the current stock price adequately reflects the growth in its mobile segment, which multiple analysts have flagged as a primary driver for a potential re-rating.