NEC Corporation Just Missed EPS By 33%: Here's What Analysts Think Will Happen Next

Last week saw the newest half-year earnings release from NEC Corporation (TSE:6701), an important milestone in the company's journey to build a stronger business. It looks like a pretty bad result, all things considered. Although revenues of JP¥1.5t were in line with analyst predictions, statutory earnings fell badly short, missing estimates by 33% to hit JP¥72.42 per share. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on NEC after the latest results.

See our latest analysis for NEC

Following last week's earnings report, NEC's eleven analysts are forecasting 2025 revenues to be JP¥3.44t, approximately in line with the last 12 months. Statutory per-share earnings are expected to be JP¥573, roughly flat on the last 12 months. Before this earnings report, the analysts had been forecasting revenues of JP¥3.44t and earnings per share (EPS) of JP¥569 in 2025. 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.

It will come as no surprise then, to learn that the consensus price target is largely unchanged at JP¥15,010. 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. The most optimistic NEC analyst has a price target of JP¥17,000 per share, while the most pessimistic values it at JP¥11,700. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

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. We would highlight that NEC's revenue growth is expected to slow, with the forecast 1.4% annualised growth rate until the end of 2025 being well below the historical 3.2% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 5.2% per year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than NEC.

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. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that NEC's revenue is expected to perform worse than the wider industry. The consensus price target held steady at JP¥15,010, with the latest estimates not enough to have an impact on their price targets.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for NEC going out to 2027, and you can see them free on our platform here.

Don't forget that there may still be risks. For instance, we've identified 1 warning sign for NEC 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.