Earnings Beat: LY Corporation Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Models

Last week saw the newest interim earnings release from LY Corporation (TSE:4689), an important milestone in the company's journey to build a stronger business. It looks like a credible result overall - although revenues of JP¥925b were what the analysts expected, LY surprised by delivering a (statutory) profit of JP¥4.77 per share, an impressive 30% above what was forecast. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on LY after the latest results.

Check out our latest analysis for LY

Taking into account the latest results, the consensus forecast from LY's eleven analysts is for revenues of JP¥1.95t in 2025. This reflects an okay 4.3% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to surge 34% to JP¥20.04. In the lead-up to this report, the analysts had been modelling revenues of JP¥1.95t and earnings per share (EPS) of JP¥19.60 in 2025. So the consensus seems to have become somewhat more optimistic on LY's earnings potential following these results.

There's been no major changes to the consensus price target of JP¥491, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values LY at JP¥650 per share, while the most bearish prices it at JP¥300. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the LY's past performance and to peers in the same industry. It's pretty clear that there is an expectation that LY's revenue growth will slow down substantially, with revenues to the end of 2025 expected to display 8.8% growth on an annualised basis. This is compared to a historical growth rate of 13% over the past five years. Compare this to the 71 other companies in this industry with analyst coverage, which are forecast to grow their revenue at 7.1% per year. Factoring in the forecast slowdown in growth, it looks like LY is forecast to grow at about the same rate as the wider industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around LY's earnings potential next year. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as 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 forecasts for LY 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 1 warning sign with LY , and understanding it 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.