Analysts Are Updating Their Koito Manufacturing Co., Ltd. (TSE:7276) Estimates After Its First-Quarter Results

Investors in Koito Manufacturing Co., Ltd. (TSE:7276) had a good week, as its shares rose 4.8% to close at JP¥2,246 following the release of its quarterly results. Results look mixed - while revenue fell marginally short of analyst estimates at JP¥230b, statutory earnings were in line with expectations, at JP¥131 per share. 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. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

See our latest analysis for Koito Manufacturing

Following last week's earnings report, Koito Manufacturing's nine analysts are forecasting 2025 revenues to be JP¥962.9b, approximately in line with the last 12 months. Per-share earnings are expected to surge 21% to JP¥134. Before this earnings report, the analysts had been forecasting revenues of JP¥974.8b and earnings per share (EPS) of JP¥155 in 2025. So there's definitely been a decline in sentiment after the latest results, noting the real cut to new EPS forecasts.

It might be a surprise to learn that the consensus price target was broadly unchanged at JP¥2,156, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. 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. Currently, the most bullish analyst values Koito Manufacturing at JP¥2,800 per share, while the most bearish prices it at JP¥1,700. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that Koito Manufacturing's revenue growth is expected to slow, with the forecast 1.2% annualised growth rate until the end of 2025 being well below the historical 4.4% 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 3.7% per year. Factoring in the forecast slowdown in growth, it seems obvious that Koito Manufacturing is also expected to grow slower than other industry participants.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Koito Manufacturing. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Koito Manufacturing's revenue is expected to perform worse than the wider industry. The consensus price target held steady at JP¥2,156, with the latest estimates not enough to have an impact on their price targets.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Koito Manufacturing analysts - going out to 2027, and you can see them free on our platform here.

However, before you get too enthused, we've discovered 2 warning signs for Koito Manufacturing 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.

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