Santen Pharmaceutical Co., Ltd. (TSE:4536) Just Released Its Annual Results And Analysts Are Updating Their Estimates

Investors in Santen Pharmaceutical Co., Ltd. (TSE:4536) had a good week, as its shares rose 3.5% to close at JP¥1,506 following the release of its yearly results. Santen Pharmaceutical reported JP¥300b in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of JP¥104 beat expectations, being 4.8% higher than what the analysts expected. 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

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Following last week's earnings report, Santen Pharmaceutical's seven analysts are forecasting 2026 revenues to be JP¥300.4b, approximately in line with the last 12 months. Statutory earnings per share are predicted to rise 2.8% to JP¥111. Yet prior to the latest earnings, the analysts had been anticipated revenues of JP¥293.4b and earnings per share (EPS) of JP¥102 in 2026. So there seems to have been a moderate uplift in sentiment following the latest results, given the upgrades to both revenue and earnings per share forecasts for next year.

See our latest analysis for Santen Pharmaceutical

Althoughthe analysts have upgraded their earnings estimates, there was no change to the consensus price target of JP¥2,062, suggesting that the forecast performance does not have a long term impact on the company'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¥2,500 per share, while the most bearish prices it at JP¥1,700. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

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. It's pretty clear that there is an expectation that Santen Pharmaceutical's revenue growth will slow down substantially, with revenues to the end of 2026 expected to display 0.1% growth on an annualised basis. This is compared to a historical growth rate of 5.4% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 3.7% per year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Santen Pharmaceutical.

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. They also upgraded their revenue estimates for next year, even though it is expected to grow slower than the wider industry. The consensus price target held steady at JP¥2,062, with the latest estimates not enough to have an impact on their price targets.

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 Santen Pharmaceutical analysts - going out to 2028, and you can see them free on our platform here.

Another thing to consider is whether management and directors have been buying or selling stock recently. We provide an overview of all open market stock trades for the last twelve months on our platform, here.

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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.