Santen Pharmaceutical Co., Ltd. Just Missed Earnings - But Analysts Have Updated Their Models

Investors in Santen Pharmaceutical Co., Ltd. (TSE:4536) had a good week, as its shares rose 6.7% to close at JP¥1,632 following the release of its annual results. Statutory earnings per share fell badly short of expectations, coming in at JP¥72.59, some 20% below analyst forecasts, although revenues were okay, approximately in line with analyst estimates at JP¥302b. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

View our latest analysis for Santen Pharmaceutical

Taking into account the latest results, the nine analysts covering Santen Pharmaceutical provided consensus estimates of JP¥294.3b revenue in 2025, which would reflect a measurable 2.5% decline over the past 12 months. Statutory earnings per share are predicted to bounce 30% to JP¥94.91. Before this earnings report, the analysts had been forecasting revenues of JP¥292.4b and earnings per share (EPS) of JP¥92.10 in 2025. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.

There's been no major changes to the consensus price target of JP¥1,787, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. 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. Currently, the most bullish analyst values Santen Pharmaceutical at JP¥2,200 per share, while the most bearish prices it at JP¥1,300. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Santen Pharmaceutical shareholders.

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. We would highlight that revenue is expected to reverse, with a forecast 2.5% annualised decline to the end of 2025. That is a notable change from historical growth of 5.2% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 4.5% annually for the foreseeable future. It's pretty clear that Santen Pharmaceutical's revenues are expected to perform substantially worse than 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 Santen Pharmaceutical's earnings potential next year. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. The consensus price target held steady at JP¥1,787, 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 forecasts for Santen Pharmaceutical going out to 2027, and you can see them free on our platform here.

You can also see our analysis of Santen Pharmaceutical's Board and CEO remuneration and experience, and whether company insiders have been buying stock.

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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.