Earnings Update: Here's Why Analysts Just Lifted Their NEXTAGE Co., Ltd. (TSE:3186) Price Target To JP¥3,123

There's been a notable change in appetite for NEXTAGE Co., Ltd. (TSE:3186) shares in the week since its third-quarter report, with the stock down 20% to JP¥1,445. NEXTAGE reported in line with analyst predictions, delivering revenues of JP¥136b and statutory earnings per share of JP¥145, suggesting the business is executing well and in line with its plan. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

Check out our latest analysis for NEXTAGE

Taking into account the latest results, the current consensus from NEXTAGE's seven analysts is for revenues of JP¥611.3b in 2025. This would reflect a meaningful 19% increase on its revenue over the past 12 months. Statutory earnings per share are predicted to shoot up 102% to JP¥207. In the lead-up to this report, the analysts had been modelling revenues of JP¥611.3b and earnings per share (EPS) of JP¥227 in 2025. The analysts seem to have become a little more negative on the business after the latest results, given the minor downgrade to their earnings per share numbers for next year.

Despite cutting their earnings forecasts,the analysts have lifted their price target 5.9% to JP¥3,123, suggesting that these impacts are not expected to weigh on the stock's value in the long term. 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 NEXTAGE, with the most bullish analyst valuing it at JP¥4,040 and the most bearish at JP¥2,200 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 NEXTAGE's revenue growth will slow down substantially, with revenues to the end of 2025 expected to display 15% growth on an annualised basis. This is compared to a historical growth rate of 20% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 6.9% annually. Even after the forecast slowdown in growth, it seems obvious that NEXTAGE is also expected to grow faster than the wider industry.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.

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 forecasts for NEXTAGE going out to 2026, and you can see them free on our platform here.

Plus, you should also learn about the 4 warning signs we've spotted with NEXTAGE (including 1 which is a bit concerning) .

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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.