Analyst Estimates: Here's What Brokers Think Of Rakuten Group, Inc. (TSE:4755) After Its Third-Quarter Report

Shareholders might have noticed that Rakuten Group, Inc. (TSE:4755) filed its quarterly result this time last week. The early response was not positive, with shares down 2.8% to JP¥900 in the past week. The results don't look great, especially considering that statutory losses grew 317% toJP¥34.60 per share. Revenues of JP¥567b did beat expectations by 2.8%, but it looks like a bit of a cold comfort. 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

See our latest analysis for Rakuten Group

Following the latest results, Rakuten Group's 13 analysts are now forecasting revenues of JP¥2.45t in 2025. This would be a notable 12% improvement in revenue compared to the last 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 89% to JP¥14.09. Before this latest report, the consensus had been expecting revenues of JP¥2.46t and JP¥12.81 per share in losses. Overall it looks as though the analysts were a bit mixed on the latest consensus updates. Although revenue forecasts held steady, the consensus also made a modest increase to its losses per share forecasts.

As a result, there was no major change to the consensus price target of JP¥980, with the analysts implicitly confirming that the business looks to be performing in line with expectations, despite higher forecast losses. 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. Currently, the most bullish analyst values Rakuten Group at JP¥1,300 per share, while the most bearish prices it at JP¥400. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

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. It's pretty clear that there is an expectation that Rakuten Group's revenue growth will slow down substantially, with revenues to the end of 2025 expected to display 9.2% growth on an annualised basis. This is compared to a historical growth rate of 12% 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. So it's pretty clear that, while Rakuten Group's revenue growth is expected to slow, it's still expected to grow faster than the industry itself.

The Bottom Line

The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at Rakuten Group. 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¥980, with the latest estimates not enough to have an impact on their price targets.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Rakuten Group going out to 2026, and you can see them free on our platform here.

We don't want to rain on the parade too much, but we did also find 1 warning sign for Rakuten Group that you need to be mindful 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.