Earnings Release: Here's Why Analysts Cut Their Nippon Chemi-Con Corporation (TSE:6997) Price Target To JP¥875

Last week, you might have seen that Nippon Chemi-Con Corporation (TSE:6997) released its third-quarter result to the market. The early response was not positive, with shares down 4.9% to JP¥947 in the past week. It was an okay report, and revenues came in at JP¥31b, approximately in line with analyst estimates leading up to the results announcement. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

View our latest analysis for Nippon Chemi-Con

Following the latest results, Nippon Chemi-Con's three analysts are now forecasting revenues of JP¥130.4b in 2026. This would be an okay 3.9% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to bounce 264% to JP¥147. In the lead-up to this report, the analysts had been modelling revenues of JP¥133.6b and earnings per share (EPS) of JP¥176 in 2026. The analysts seem less optimistic after the recent results, reducing their revenue forecasts and making a substantial drop in earnings per share numbers.

It'll come as no surprise then, to learn that the analysts have cut their price target 12% to JP¥875. 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 Nippon Chemi-Con at JP¥1,000 per share, while the most bearish prices it at JP¥750. Still, with such a tight range of estimates, it suggeststhe analysts have a pretty good idea of what they think the company is worth.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that Nippon Chemi-Con's revenue growth is expected to slow, with the forecast 3.1% annualised growth rate until the end of 2026 being well below the historical 6.3% p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 7.2% annually. Factoring in the forecast slowdown in growth, it seems obvious that Nippon Chemi-Con is also expected to grow slower than other industry participants.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Nippon Chemi-Con. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Nippon Chemi-Con's future valuation.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Nippon Chemi-Con going out to 2027, and you can see them free on our platform here..

Plus, you should also learn about the 3 warning signs we've spotted with Nippon Chemi-Con (including 1 which is a bit concerning) .

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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.