Dentsu Group Inc. (TSE:4324) Just Reported Earnings, And Analysts Cut Their Target Price

There's been a notable change in appetite for Dentsu Group Inc. (TSE:4324) shares in the week since its half-year report, with the stock down 13% to JP¥2,753. It was a pretty bad result overall; while revenues were in line with expectations at JP¥684b, statutory losses exploded to JP¥308 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. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

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Taking into account the latest results, Dentsu Group's nine analysts currently expect revenues in 2025 to be JP¥1.43t, approximately in line with the last 12 months. Earnings are expected to improve, with Dentsu Group forecast to report a statutory profit of JP¥39.47 per share. Before this earnings report, the analysts had been forecasting revenues of JP¥1.43t and earnings per share (EPS) of JP¥103 in 2025. So there's definitely been a decline in sentiment after the latest results, noting the large cut to new EPS forecasts.

Check out our latest analysis for Dentsu Group

The average price target fell 6.0% to JP¥3,080, with reduced earnings forecasts clearly tied to a lower valuation estimate. 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. There are some variant perceptions on Dentsu Group, with the most bullish analyst valuing it at JP¥3,600 and the most bearish at JP¥2,400 per share. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.

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 Dentsu Group's revenue growth is expected to slow, with the forecast 1.8% annualised growth rate until the end of 2025 being well below the historical 8.9% p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 6.1% annually. Factoring in the forecast slowdown in growth, it seems obvious that Dentsu Group is also expected to grow slower than other industry participants.

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. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. 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.

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

It is also worth noting that we have found 2 warning signs for Dentsu Group that you need to take into consideration.

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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.