Otsuka Holdings Co., Ltd. Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Predictions

A week ago, Otsuka Holdings Co., Ltd. (TSE:4578) came out with a strong set of first-quarter numbers that could potentially lead to a re-rate of the stock. Otsuka Holdings beat earnings, with revenues hitting JP¥520b, ahead of expectations, and statutory earnings per share outperforming analyst reckonings by a solid 19%. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

Check out our latest analysis for Otsuka Holdings

After the latest results, the eleven analysts covering Otsuka Holdings are now predicting revenues of JP¥2.17t in 2024. If met, this would reflect a reasonable 3.8% improvement in revenue compared to the last 12 months. Per-share earnings are expected to leap 86% to JP¥472. Before this earnings report, the analysts had been forecasting revenues of JP¥2.15t and earnings per share (EPS) of JP¥465 in 2024. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.

The analysts reconfirmed their price target of JP¥6,136, 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. There are some variant perceptions on Otsuka Holdings, with the most bullish analyst valuing it at JP¥8,000 and the most bearish at JP¥4,800 per share. 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.

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. It's pretty clear that there is an expectation that Otsuka Holdings' revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 5.0% growth on an annualised basis. This is compared to a historical growth rate of 9.0% over the past five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 4.5% annually. Factoring in the forecast slowdown in growth, it looks like Otsuka Holdings is forecast to grow at about the same rate as 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. Happily, there were no real changes to revenue forecasts, with the business still expected to grow in line with the overall 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 estimates - from multiple Otsuka Holdings analysts - going out to 2026, and you can see them free on our platform here.

Even so, be aware that Otsuka Holdings is showing 2 warning signs in our investment analysis , 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.