EN
Earnings Miss: Towa Pharmaceutical Co., Ltd. Missed EPS By 75% And Analysts Are Revising Their Forecasts
Towa Pharmaceutical Co., Ltd. (TSE:4553) came out with its half-year results last week, and we wanted to see how the business is performing and what industry forecasters think of the company following this report. Statutory earnings per share fell badly short of expectations, coming in at JP¥25.60, some 75% below analyst forecasts, although revenues were okay, approximately in line with analyst estimates at JP¥142b. 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
Taking into account the latest results, the consensus forecast from Towa Pharmaceutical's six analysts is for revenues of JP¥305.4b in 2027. This reflects a modest 7.0% improvement in revenue compared to the last 12 months. Per-share earnings are expected to leap 477% to JP¥457. Yet prior to the latest earnings, the analysts had been anticipated revenues of JP¥306.6b and earnings per share (EPS) of JP¥470 in 2027. The analysts seem to have become a little more negative on the business after the latest results, given the small dip in their earnings per share numbers for next year.
Check out our latest analysis for Towa Pharmaceutical
It might be a surprise to learn that the consensus price target was broadly unchanged at JP¥5,267, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values Towa Pharmaceutical at JP¥6,300 per share, while the most bearish prices it at JP¥4,200. 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.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Towa Pharmaceutical's past performance and to peers in the same industry. It's clear from the latest estimates that Towa Pharmaceutical's rate of growth is expected to accelerate meaningfully, with the forecast 14% annualised revenue growth to the end of 2027 noticeably faster than its historical growth of 12% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 3.4% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Towa Pharmaceutical to grow faster than the wider industry.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Towa Pharmaceutical. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. The consensus price target held steady at JP¥5,267, with the latest estimates not enough to have an impact on their price targets.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for Towa Pharmaceutical going out to 2029, and you can see them free on our platform here..
However, before you get too enthused, we've discovered 4 warning signs for Towa Pharmaceutical (1 is concerning!) that you should be aware of.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.