and ST HD Co.,Ltd. Just Missed EPS By 37%: Here's What Analysts Think Will Happen Next

Investors in and ST HD Co.,Ltd. (TSE:2685) had a good week, as its shares rose 4.2% to close at JP¥2,875 following the release of its quarterly results. Statutory earnings per share fell badly short of expectations, coming in at JP¥77.40, some 37% below analyst forecasts, although revenues were okay, approximately in line with analyst estimates at JP¥78b. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on and ST HDLtd after the latest results.

AI is about to change healthcare. These 20 stocks are working on everything from early diagnostics to drug discovery. The best part - they are all under $10bn in marketcap - there is still time to get in early.

Following the latest results, and ST HDLtd's five analysts are now forecasting revenues of JP¥312.9b in 2027. This would be a satisfactory 4.2% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to bounce 26% to JP¥252. Yet prior to the latest earnings, the analysts had been anticipated revenues of JP¥310.9b and earnings per share (EPS) of JP¥242 in 2027. So the consensus seems to have become somewhat more optimistic on and ST HDLtd's earnings potential following these results.

Check out our latest analysis for and ST HDLtd

The consensus price target was unchanged at JP¥3,088, 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 and ST HDLtd analyst has a price target of JP¥3,400 per share, while the most pessimistic values it at JP¥2,900. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.

Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that and ST HDLtd's revenue growth is expected to slow, with the forecast 3.3% annualised growth rate until the end of 2027 being well below the historical 11% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 6.8% per year. Factoring in the forecast slowdown in growth, it seems obvious that and ST HDLtd is also expected to grow slower than other industry participants.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around and ST HDLtd's earnings potential next year. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that and ST HDLtd's revenue is expected to perform worse than the wider industry. The consensus price target held steady at JP¥3,088, 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. We have forecasts for and ST HDLtd going out to 2028, and you can see them free on our platform here.

Before you take the next step you should know about the 1 warning sign for and ST HDLtd that we have uncovered.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.