Earnings Beat: Tosei Corporation Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Models

Investors in Tosei Corporation (TSE:8923) had a good week, as its shares rose 8.1% to close at JP¥2,772 following the release of its half-year results. Revenues of JP¥66b fell slightly short of expectations, but earnings were a definite bright spot, with statutory per-share profits of JP¥83.52 an impressive 53% ahead of estimates. 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.

AI is about to change healthcare. These 20 stocks are working on everything from early diagnostics to drug discovery. The best part - they are all under $10bn in marketcap - there is still time to get in early.

Taking into account the latest results, the consensus forecast from Tosei's four analysts is for revenues of JP¥98.8b in 2025. This reflects a meaningful 9.0% improvement in revenue compared to the last 12 months. Statutory earnings per share are forecast to shrink 2.0% to JP¥286 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of JP¥100.2b and earnings per share (EPS) of JP¥272 in 2025. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.

See our latest analysis for Tosei

There's been no major changes to the consensus price target of JP¥2,980, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. 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 Tosei analyst has a price target of JP¥3,310 per share, while the most pessimistic values it at JP¥2,650. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or thatthe analysts have a strong view on its prospects.

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. The analysts are definitely expecting Tosei's growth to accelerate, with the forecast 19% annualised growth to the end of 2025 ranking favourably alongside historical growth of 7.7% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 4.6% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Tosei is expected to grow much faster than its industry.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Tosei following these results. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. The consensus price target held steady at JP¥2,980, 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 Tosei analysts - going out to 2027, and you can see them free on our platform here.

You should always think about risks though. Case in point, we've spotted 2 warning signs for Tosei you should be aware of, and 1 of them makes us a bit uncomfortable.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.