Sumitomo Chemical Company, Limited (TSE:4005) Just Reported Half-Year Earnings: Have Analysts Changed Their Mind On The Stock?

Sumitomo Chemical Company, Limited (TSE:4005) shareholders are probably feeling a little disappointed, since its shares fell 2.1% to JP¥393 in the week after its latest half-yearly results. Revenues of JP¥1.2t came in a modest 3.0% below forecasts. Statutory losses were a relative bright spot though, with a per-share loss of JP¥18.90 coming in a substantial 30% smaller than what the analysts had expected. 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. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

Check out our latest analysis for Sumitomo Chemical Company

After the latest results, the ten analysts covering Sumitomo Chemical Company are now predicting revenues of JP¥2.60t in 2025. If met, this would reflect a modest 4.0% improvement in revenue compared to the last 12 months. Sumitomo Chemical Company is also expected to turn profitable, with statutory earnings of JP¥15.30 per share. Yet prior to the latest earnings, the analysts had been anticipated revenues of JP¥2.61t and earnings per share (EPS) of JP¥16.51 in 2025. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but the analysts did make a small dip in their earnings per share forecasts.

The consensus price target held steady at JP¥456, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Sumitomo Chemical Company, with the most bullish analyst valuing it at JP¥550 and the most bearish at JP¥360 per share. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's clear from the latest estimates that Sumitomo Chemical Company's rate of growth is expected to accelerate meaningfully, with the forecast 8.2% annualised revenue growth to the end of 2025 noticeably faster than its historical growth of 3.6% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 5.2% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Sumitomo Chemical Company to grow faster than the wider industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Sumitomo Chemical Company. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. The consensus price target held steady at JP¥456, 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 Sumitomo Chemical Company analysts - going out to 2027, and you can see them free on our platform here.

That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 2 warning signs with Sumitomo Chemical Company , and understanding these should be part of your investment process.

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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.