Towa Pharmaceutical Co., Ltd. Just Beat Earnings Expectations: Here's What Analysts Think Will Happen Next

It's been a good week for Towa Pharmaceutical Co., Ltd. (TSE:4553) shareholders, because the company has just released its latest third-quarter results, and the shares gained 3.8% to JP¥3,020. It looks like a credible result overall - although revenues of JP¥70b were what the analysts expected, Towa Pharmaceutical surprised by delivering a (statutory) profit of JP¥164 per share, an impressive 184% above what was forecast. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

View our latest analysis for Towa Pharmaceutical

Taking into account the latest results, the most recent consensus for Towa Pharmaceutical from four analysts is for revenues of JP¥277.9b in 2026. If met, it would imply a meaningful 9.7% increase on its revenue over the past 12 months. Statutory earnings per share are expected to descend 18% to JP¥320 in the same period. Before this earnings report, the analysts had been forecasting revenues of JP¥279.6b and earnings per share (EPS) of JP¥322 in 2026. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.

The analysts reconfirmed their price target of JP¥3,750, showing that the business is executing well and in line with expectations. 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 Towa Pharmaceutical at JP¥4,600 per share, while the most bearish prices it at JP¥3,000. 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 Towa Pharmaceutical shareholders.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. We would highlight that Towa Pharmaceutical's revenue growth is expected to slow, with the forecast 7.7% annualised growth rate until the end of 2026 being well below the historical 16% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 4.0% annually. Even after the forecast slowdown in growth, it seems obvious that Towa Pharmaceutical is also expected to grow faster than the wider industry.

The Bottom Line

The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Fortunately, they also reconfirmed their revenue numbers, suggesting that it's tracking in line with expectations. Additionally, our data suggests that revenue is expected to grow faster than 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.

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 estimates - from multiple Towa Pharmaceutical analysts - going out to 2027, and you can see them free on our platform here.

You still need to take note of risks, for example - Towa Pharmaceutical has 2 warning signs (and 1 which is a bit concerning) we think you should know about.

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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.