Mercari, Inc. Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Predictions

Mercari, Inc. (TSE:4385) defied analyst predictions to release its interim results, which were ahead of market expectations. It was overall a positive result, with revenues beating expectations by 2.3% to hit JP¥94b. Mercari also reported a statutory profit of JP¥27.12, which was an impressive 55% above what the analysts had forecast. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Mercari after the latest results.

Check out our latest analysis for Mercari

Following the latest results, Mercari's twelve analysts are now forecasting revenues of JP¥195.9b in 2025. This would be a reasonable 3.6% improvement in revenue compared to the last 12 months. Statutory per-share earnings are expected to be JP¥97.59, roughly flat on the last 12 months. Yet prior to the latest earnings, the analysts had been anticipated revenues of JP¥195.6b and earnings per share (EPS) of JP¥93.55 in 2025. So the consensus seems to have become somewhat more optimistic on Mercari's earnings potential following these results.

The consensus price target rose 5.0% to JP¥2,394, suggesting that higher earnings estimates flow through to the stock's valuation as well. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic Mercari analyst has a price target of JP¥3,500 per share, while the most pessimistic values it at JP¥1,800. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

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 Mercari's revenue growth will slow down substantially, with revenues to the end of 2025 expected to display 7.3% growth on an annualised basis. This is compared to a historical growth rate of 20% 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) 5.4% per year. Even after the forecast slowdown in growth, it seems obvious that Mercari is also expected to grow faster than the wider industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Mercari's earnings potential next year. 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. 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.

With that in mind, we wouldn't be too quick to come to a conclusion on Mercari. Long-term earnings power is much more important than next year's profits. We have forecasts for Mercari going out to 2027, and you can see them free on our platform here.

However, before you get too enthused, we've discovered 2 warning signs for Mercari that you should be aware of.

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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.