Otsuka Holdings Co., Ltd. Just Beat EPS By 57%: Here's What Analysts Think Will Happen Next

Otsuka Holdings Co., Ltd. (TSE:4578) just released its latest half-yearly results and things are looking bullish. It was overall a positive result, with revenues beating expectations by 6.6% to hit JP¥1.1t. Otsuka Holdings also reported a statutory profit of JP¥199, which was an impressive 57% above what the analysts had forecast. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Otsuka Holdings after the latest results.

View our latest analysis for Otsuka Holdings

Following the latest results, Otsuka Holdings' eleven analysts are now forecasting revenues of JP¥2.25t in 2024. This would be a reasonable 3.0% improvement in revenue compared to the last 12 months. Per-share earnings are expected to bounce 72% to JP¥401. In the lead-up to this report, the analysts had been modelling revenues of JP¥2.22t and earnings per share (EPS) of JP¥407 in 2024. 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.

It will come as no surprise then, to learn that the consensus price target is largely unchanged at JP¥7,023. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Otsuka Holdings analyst has a price target of JP¥8,700 per share, while the most pessimistic values it at JP¥5,000. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

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 Otsuka Holdings' revenue growth is expected to slow, with the forecast 6.1% annualised growth rate until the end of 2024 being well below the historical 9.7% p.a. growth over the last five years. Compare this to the 41 other companies in this industry with analyst coverage, which are forecast to grow their revenue at 4.9% per year. So it's pretty clear that, while Otsuka Holdings' revenue growth is expected to slow, it's expected to grow roughly in line with the 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 forecasts for Otsuka Holdings 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.

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