Olympus Corporation Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Predictions

As you might know, Olympus Corporation (TSE:7733) just kicked off its latest first-quarter results with some very strong numbers. It was overall a positive result, with revenues beating expectations by 5.3% to hit JP¥240b. Olympus also reported a statutory profit of JP¥17.76, which was an impressive 85% above what the analysts had forecast. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

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After the latest results, the 13 analysts covering Olympus are now predicting revenues of JP¥1.07t in 2027. If met, this would reflect an okay 2.5% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to soar 26% to JP¥92.97. In the lead-up to this report, the analysts had been modelling revenues of JP¥1.07t and earnings per share (EPS) of JP¥91.03 in 2027. So the consensus seems to have become somewhat more optimistic on Olympus' earnings potential following these results.

Check out our latest analysis for Olympus

The consensus price target was unchanged at JP¥1,959, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic Olympus analyst has a price target of JP¥2,300 per share, while the most pessimistic values it at JP¥1,600. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We would highlight that Olympus' revenue growth is expected to slow, with the forecast 3.4% annualised growth rate until the end of 2027 being well below the historical 4.8% p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 6.4% annually. Factoring in the forecast slowdown in growth, it seems obvious that Olympus is also expected to grow slower than other industry participants.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Olympus following these results. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Olympus going out to 2029, and you can see them free on our platform here.

However, before you get too enthused, we've discovered 3 warning signs for Olympus that you should be aware of.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.