Earnings Miss: West Holdings Corporation Missed EPS By 6.8% And Analysts Are Revising Their Forecasts

The analysts might have been a bit too bullish on West Holdings Corporation (TSE:1407), given that the company fell short of expectations when it released its full-year results last week. Results look to have been somewhat negative - revenue fell 5.6% short of analyst estimates at JP¥50b, and statutory earnings of JP¥167 per share missed forecasts by 6.8%. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

Check out our latest analysis for West Holdings

Taking into account the latest results, the most recent consensus for West Holdings from five analysts is for revenues of JP¥62.7b in 2025. If met, it would imply a sizeable 24% increase on its revenue over the past 12 months. Statutory earnings per share are predicted to surge 38% to JP¥235. Before this earnings report, the analysts had been forecasting revenues of JP¥66.3b and earnings per share (EPS) of JP¥229 in 2025. If anything, the analysts look to have become slightly more optimistic overall; while they decreased their revenue forecasts, EPS predictions increased and ultimately earnings are more important.

The consensus has made no major changes to the price target of JP¥3,862, suggesting the forecast improvement in earnings is expected to offset the decline in revenues next year. 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. The most optimistic West Holdings analyst has a price target of JP¥5,000 per share, while the most pessimistic values it at JP¥2,700. 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.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. One thing stands out from these estimates, which is that West Holdings is forecast to grow faster in the future than it has in the past, with revenues expected to display 24% annualised growth until the end of 2025. If achieved, this would be a much better result than the 6.4% annual decline over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 2.3% per year. So it looks like West Holdings is expected to grow faster than its competitors, at least for a while.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around West Holdings' earnings potential next year. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than the wider industry. Still, earnings per share are more important to value creation for shareholders. The consensus price target held steady at JP¥3,862, with the latest estimates not enough to have an impact on their price targets.

With that in mind, we wouldn't be too quick to come to a conclusion on West Holdings. Long-term earnings power is much more important than next year's profits. We have forecasts for West Holdings going out to 2027, and you can see them free on our platform here.

Before you take the next step you should know about the 4 warning signs for West Holdings (2 are potentially serious!) that we have uncovered.

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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.