Topcon Corporation Just Missed Earnings - But Analysts Have Updated Their Models

The half-year results for Topcon Corporation (TSE:7732) were released last week, making it a good time to revisit its performance. It looks like a pretty bad result, all things considered. Although revenues of JP¥105b were in line with analyst predictions, statutory earnings fell badly short, missing estimates by 95% to hit JP¥0.58 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

View our latest analysis for Topcon

After the latest results, the seven analysts covering Topcon are now predicting revenues of JP¥226.7b in 2025. If met, this would reflect an okay 4.2% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to leap 77% to JP¥73.55. Before this earnings report, the analysts had been forecasting revenues of JP¥227.8b and earnings per share (EPS) of JP¥76.36 in 2025. The analysts seem to have become a little more negative on the business after the latest results, given the small dip in their earnings per share numbers for next year.

It might be a surprise to learn that the consensus price target was broadly unchanged at JP¥1,737, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. 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 Topcon at JP¥2,000 per share, while the most bearish prices it at JP¥1,300. 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.

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. It's pretty clear that there is an expectation that Topcon's revenue growth will slow down substantially, with revenues to the end of 2025 expected to display 8.6% growth on an annualised basis. This is compared to a historical growth rate of 12% over the past five years. Compare this to the 186 other companies in this industry with analyst coverage, which are forecast to grow their revenue at 7.3% per year. So it's pretty clear that, while Topcon's 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 the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

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

That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 4 warning signs with Topcon (at least 1 which can't be ignored) , and understanding them should be part of your investment process.

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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.