News Flash: One Nippon Carbon Co., Ltd. (TSE:5302) Analyst Has Been Trimming Their Revenue Forecasts

Market forces rained on the parade of Nippon Carbon Co., Ltd. (TSE:5302) shareholders today, when the covering analyst downgraded their forecasts for this year. Revenue estimates were cut sharply as the analyst signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well.

Following the downgrade, the latest consensus from Nippon Carbon's single analyst is for revenues of JP¥39b in 2025, which would reflect a modest 2.8% improvement in sales compared to the last 12 months. Statutory earnings per share are forecast to be JP¥371, approximately in line with the last 12 months. Before this latest update, the analyst had been forecasting revenues of JP¥45b and earnings per share (EPS) of JP¥407 in 2025. It looks like analyst sentiment has fallen somewhat in this update, with a measurable cut to revenue estimates and a minor downgrade to earnings per share numbers as well.

View our latest analysis for Nippon Carbon

It'll come as no surprise then, to learn that the analyst has cut their price target 8.3% to JP¥4,400.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Nippon Carbon's past performance and to peers in the same industry. The period to the end of 2025 brings more of the same, according to the analyst, with revenue forecast to display 2.8% growth on an annualised basis. That is in line with its 2.8% annual growth over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 4.3% per year. So although Nippon Carbon is expected to maintain its revenue growth rate, it's forecast to grow slower than the wider industry.

The Bottom Line

The biggest issue in the new estimates is that the analyst has reduced their earnings per share estimates, suggesting business headwinds lay ahead for Nippon Carbon. Unfortunately the analyst also downgraded their revenue estimates, and industry data suggests that Nippon Carbon's revenues are expected to grow slower than the wider market. The consensus price target fell measurably, with the analyst seemingly not reassured by recent business developments, leading to a lower estimate of Nippon Carbon's future valuation. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of Nippon Carbon going forwards.

Uncomfortably, our automated valuation tool also suggests that Nippon Carbon stock could be overvalued following the downgrade. Shareholders could be left disappointed if these estimates play out. You can learn more about our valuation methodology for free on our platform here.

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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.