Ferrotec Holdings Corporation (TSE:6890) Just Reported Earnings, And Analysts Cut Their Target Price

Last week, you might have seen that Ferrotec Holdings Corporation (TSE:6890) released its third-quarter result to the market. The early response was not positive, with shares down 7.1% to JP¥2,408 in the past week. Results look mixed - while revenue fell marginally short of analyst estimates at JP¥67b, statutory earnings were in line with expectations, at JP¥323 per share. 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.

See our latest analysis for Ferrotec Holdings

Following the latest results, Ferrotec Holdings' three analysts are now forecasting revenues of JP¥289.5b in 2026. This would be a notable 13% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to bounce 32% to JP¥404. Before this earnings report, the analysts had been forecasting revenues of JP¥291.3b and earnings per share (EPS) of JP¥407 in 2026. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.

With no major changes to earnings forecasts, the consensus price target fell 5.5% to JP¥3,450, suggesting that the analysts might have previously been hoping for an earnings upgrade. 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 Ferrotec Holdings at JP¥4,100 per share, while the most bearish prices it at JP¥2,800. 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.

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 Ferrotec Holdings' revenue growth will slow down substantially, with revenues to the end of 2026 expected to display 10% growth on an annualised basis. This is compared to a historical growth rate of 26% 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) 8.8% annually. So it's pretty clear that, while Ferrotec Holdings' revenue growth is expected to slow, it's expected to grow roughly in line with the industry.

The Bottom Line

The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Happily, there were no real changes to revenue forecasts, with the business still expected to grow in line with the overall industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.

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 Ferrotec Holdings going out to 2027, and you can see them free on our platform here.

It is also worth noting that we have found 2 warning signs for Ferrotec Holdings that you need to take into consideration.

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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.