Advantest Corporation Just Beat Earnings Expectations: Here's What Analysts Think Will Happen Next

A week ago, Advantest Corporation (TSE:6857) came out with a strong set of first-quarter numbers that could potentially lead to a re-rate of the stock. Advantest delivered a significant beat to revenue and earnings per share (EPS) expectations, hitting JP¥139b-16% above indicated-andJP¥32.35-55% above forecasts- respectively 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. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

Check out our latest analysis for Advantest

Taking into account the latest results, the consensus forecast from Advantest's 15 analysts is for revenues of JP¥574.3b in 2025. This reflects a meaningful 9.6% improvement in revenue compared to the last 12 months. Per-share earnings are expected to soar 25% to JP¥131. In the lead-up to this report, the analysts had been modelling revenues of JP¥551.9b and earnings per share (EPS) of JP¥112 in 2025. So it seems there's been a definite increase in optimism about Advantest's future following the latest results, with a decent improvement in the earnings per share forecasts in particular.

It will come as no surprise to learn that the analysts have increased their price target for Advantest 6.4% to JP¥7,200on the back of these upgrades. 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 Advantest analyst has a price target of JP¥8,700 per share, while the most pessimistic values it at JP¥5,600. 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. The period to the end of 2025 brings more of the same, according to the analysts, with revenue forecast to display 13% growth on an annualised basis. That is in line with its 16% annual growth over the past five years. Compare this with the broader industry, which analyst estimates (in aggregate) suggest will see revenues grow 12% annually. So although Advantest is expected to maintain its revenue growth rate, it's only growing at about the rate of 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 Advantest's earnings potential next year. There was also an upgrade to revenue estimates, although as we saw earlier, forecast growth is only expected to be about the same as 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 estimates - from multiple Advantest analysts - going out to 2027, and you can see them free on our platform here.

And what about risks? Every company has them, and we've spotted 1 warning sign for Advantest 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.

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