NEXON Co., Ltd. Just Beat Earnings Expectations: Here's What Analysts Think Will Happen Next

NEXON Co., Ltd. (TSE:3659) just released its latest half-yearly results and things are looking bullish. NEXON beat earnings, with revenues hitting JP¥231b, ahead of expectations, and statutory earnings per share outperforming analyst reckonings by a solid 13%. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

See our latest analysis for NEXON

Following the latest results, NEXON's 16 analysts are now forecasting revenues of JP¥493.5b in 2024. This would be a decent 13% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to surge 98% to JP¥165. Yet prior to the latest earnings, the analysts had been anticipated revenues of JP¥475.4b and earnings per share (EPS) of JP¥146 in 2024. So it seems there's been a definite increase in optimism about NEXON's future following the latest results, with a nice increase in the earnings per share forecasts in particular.

Despite these upgrades,the analysts have not made any major changes to their price target of JP¥3,729, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values NEXON at JP¥5,500 per share, while the most bearish prices it at JP¥2,500. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

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. The analysts are definitely expecting NEXON's growth to accelerate, with the forecast 28% annualised growth to the end of 2024 ranking favourably alongside historical growth of 12% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 7.7% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that NEXON is expected to grow much faster than its industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around NEXON's earnings potential next year. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple NEXON analysts - going out to 2026, and you can see them free on our platform here.

However, before you get too enthused, we've discovered 3 warning signs for NEXON that you should be aware of.

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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.