Zensho Holdings Co., Ltd. (TSE:7550) Just Reported And Analysts Have Been Lifting Their Price Targets

Investors in Zensho Holdings Co., Ltd. (TSE:7550) had a good week, as its shares rose 4.2% to close at JP¥8,204 following the release of its half-year results. It was a workmanlike result, with revenues of JP¥558b coming in 2.7% ahead of expectations, and statutory earnings per share of JP¥195, in line with analyst appraisals. 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

See our latest analysis for Zensho Holdings

Taking into account the latest results, the current consensus from Zensho Holdings' three analysts is for revenues of JP¥1.11t in 2025. This would reflect a satisfactory 3.5% increase on its revenue over the past 12 months. Per-share earnings are expected to expand 16% to JP¥289. Yet prior to the latest earnings, the analysts had been anticipated revenues of JP¥1.10t and earnings per share (EPS) of JP¥261 in 2025. There was no real change to the revenue estimates, but the analysts do seem more bullish on earnings, given the substantial gain in earnings per share expectations following these results.

The analysts have been lifting their price targets on the back of the earnings upgrade, with the consensus price target rising 11% to JP¥9,167. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Zensho Holdings analyst has a price target of JP¥11,000 per share, while the most pessimistic values it at JP¥7,800. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Zensho Holdings shareholders.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We would highlight that Zensho Holdings' revenue growth is expected to slow, with the forecast 7.2% annualised growth rate until the end of 2025 being well below the historical 12% p.a. growth over the last five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 6.6% annually. Factoring in the forecast slowdown in growth, it looks like Zensho Holdings is forecast to grow at about the same rate as the wider industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Zensho Holdings' earnings potential next year. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.

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 Zensho Holdings going out to 2027, and you can see them free on our platform here..

Even so, be aware that Zensho Holdings is showing 2 warning signs in our investment analysis , you should know about...

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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.