Olympus (TSE:7733): Revisiting Valuation After a Recent Share Price Bounce

Olympus (TSE:7733) has been quietly grinding through a mixed year in the market, but the latest bounce in the share price has investors revisiting the story around its medical equipment growth and earnings momentum.

See our latest analysis for Olympus.

Despite a solid 90 day share price return of 11.33 percent, Olympus is still nursing a weaker year to date share price performance and a 1 year total shareholder return of negative 14.23 percent. This suggests sentiment is only cautiously rebuilding around its earnings story.

If Olympus has you rethinking healthcare exposure, it might be worth exploring other medical names using our screener for healthcare stocks as potential complements or alternatives in your portfolio.

With revenue and earnings still growing but the share price lagging, the key question now is whether Olympus is quietly trading below its true potential, or if the market is already pricing in its recovery.

Most Popular Narrative Narrative: 4% Undervalued

With Olympus closing at ¥2,004 versus a narrative fair value near ¥2,078, the story hinges on steady growth assumptions and a richer future earnings multiple.

The analysts have a consensus price target of ¥2119.421 for Olympus based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of ¥3411.9, and the most bearish reporting a price target of just ¥1660.0.

Read the complete narrative.

Want to see what justifies paying a higher future earnings multiple for only modest revenue and margin gains, all discounted at a tight rate? The full narrative unpacks the growth runway, profitability trade offs, and valuation bridge that turn today’s price into that higher fair value.

Result: Fair Value of ¥2,078 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, continued pricing and policy pressure in China, alongside elevated R&D spending, could easily derail those modest growth and margin assumptions.

Find out about the key risks to this Olympus narrative.

Another View: Market Multiples Paint a Tougher Picture

Step away from narrative fair value and the current valuation looks less forgiving. At about 22.6 times earnings, Olympus trades not only richer than the JP Medical Equipment industry at around 15 times, but also above its peer average of roughly 20.4 times.

The fair ratio, near 29.8 times, implies the market could justify paying even more for each yen of earnings if confidence in growth and execution improves. Until that gap closes, though, investors are paying a premium today and banking on sentiment catching up tomorrow rather than buying a clear bargain.

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own Olympus Narrative

If the story here does not quite fit your view, dive into the numbers yourself and build a tailored narrative in minutes, Do it your way.

A good starting point is our analysis highlighting 2 key rewards investors are optimistic about regarding Olympus.

Ready for more investment ideas?

Olympus may be one chapter of your strategy, but you will miss compelling opportunities if you do not actively scan for fresh, data backed ideas.

• Capture income potential by targeting dependable payers with these 14 dividend stocks with yields > 3%, and build a stream of returns that does not solely rely on share price gains.
• Position yourself ahead of the next tech wave by screening for innovators through these 25 AI penny stocks, where growth and structural tailwinds can compound over time.
• Strengthen your long term performance by focusing on value oriented names using these 927 undervalued stocks based on cash flows, before the broader market fully recognizes their cash flow strength.

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.

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