Kissei Pharmaceutical (TSE:4547): Valuation Insights Following Upgraded Earnings Guidance and Higher Dividend

Kissei Pharmaceutical (TSE:4547) caught investors’ attention after raising its consolidated earnings guidance for the fiscal year ending March 2026. The company also announced a bigger interim dividend compared to the prior year.

See our latest analysis for Kissei Pharmaceutical.

The improved earnings outlook and higher dividend appear to have renewed investor optimism, with the share price up modestly in recent days and the stock’s 1-year total shareholder return at a robust 19.5%. Longer-term holders have seen significant gains, with the 3-year total return above 78%, which suggests the momentum is still with those betting on the company’s growth trajectory.

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With shares trading below analyst price targets and recent gains reflecting renewed optimism, the question is whether Kissei Pharmaceutical remains undervalued or if the market has already factored in its projected growth. Could there be more upside ahead?

Price-to-Earnings of 12.1x: Is It Justified?

Kissei Pharmaceutical trades at a price-to-earnings ratio (P/E) of 12.1x, which makes it appear undervalued relative to the broader Japanese pharmaceuticals industry average of 15.3x. With a last closing price of ¥4,215, this suggests the market does not fully price in the company’s earnings strength or potential.

The price-to-earnings ratio is a measure of how much investors are willing to pay for a company’s earnings. In pharmaceuticals, it reflects expectations for growth, profitability, and business quality. Kissei Pharmaceutical’s current multiple points to a valuation below that of industry peers, possibly signaling a disconnect between recent results and market perception.

The company is trading at a lower multiple than the industry and is also below the estimated fair P/E of 14.6x. This suggests there may be room for the market to re-rate the stock closer to that level if positive momentum continues or if future earnings stabilize.

Explore the SWS fair ratio for Kissei Pharmaceutical

Result: Price-to-Earnings of 12.1x (UNDERVALUED)

However, revenue growth remains modest and net income has slightly declined. This could signal challenges ahead if industry conditions worsen or competition intensifies.

Find out about the key risks to this Kissei Pharmaceutical narrative.

Another View: DCF Model Weighs In

While the earnings ratio points to Kissei Pharmaceutical being undervalued, our DCF model offers a slightly different perspective. The SWS DCF model suggests the stock is trading nearly 9% below its estimated fair value. This aligns with the idea that the shares may have more room to run. However, how much confidence should investors place in such long-term forecasts?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Kissei Pharmaceutical for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 894 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Kissei Pharmaceutical Narrative

If you want to dig deeper or challenge this analysis, why not explore the numbers yourself and shape your own perspective in just a few minutes? Do it your way

A great starting point for your Kissei Pharmaceutical research is our analysis highlighting 3 key rewards and 2 important warning signs that could impact your investment decision.

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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.

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