Results: NEXON Co., Ltd. Beat Earnings Expectations And Analysts Now Have New Forecasts

NEXON Co., Ltd. (TSE:3659) shareholders are probably feeling a little disappointed, since its shares fell 7.5% to JP¥2,016 in the week after its latest yearly results. It looks to have been a decent result overall - while revenue fell marginally short of analyst estimates at JP¥446b, statutory earnings beat expectations by a notable 22%, coming in at JP¥162 per share. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

See our latest analysis for NEXON

Following last week's earnings report, NEXON's 15 analysts are forecasting 2025 revenues to be JP¥445.2b, approximately in line with the last 12 months. Statutory earnings per share are expected to nosedive 27% to JP¥120 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of JP¥476.4b and earnings per share (EPS) of JP¥132 in 2025. It's pretty clear that pessimism has reared its head after the latest results, leading to a weaker revenue outlook and a minor downgrade to earnings per share estimates.

It'll come as no surprise then, to learn that the analysts have cut their price target 7.2% to JP¥2,640. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic NEXON analyst has a price target of JP¥3,500 per share, while the most pessimistic values it at JP¥1,900. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

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. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 0.2% by the end of 2025. This indicates a significant reduction from annual growth of 13% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 13% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - NEXON is expected to lag the wider industry.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.

With that in mind, we wouldn't be too quick to come to a conclusion on NEXON. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple NEXON analysts - going out to 2027, and you can see them free on our platform here.

You should always think about risks though. Case in point, we've spotted 1 warning sign for NEXON 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.