Canon Inc. Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Predictions

Canon Inc. (TSE:7751) last week reported its latest half-yearly results, which makes it a good time for investors to dive in and see if the business is performing in line with expectations. The result was positive overall - although revenues of JP¥2.2t were in line with what the analysts predicted, Canon surprised by delivering a statutory profit of JP¥169 per share, modestly greater than expected. 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 Canon after the latest results.

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Taking into account the latest results, Canon's eleven analysts currently expect revenues in 2025 to be JP¥4.59t, approximately in line with the last 12 months. Statutory earnings per share are predicted to shoot up 80% to JP¥332. Yet prior to the latest earnings, the analysts had been anticipated revenues of JP¥4.59t and earnings per share (EPS) of JP¥343 in 2025. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but the analysts did make a minor downgrade to their earnings per share forecasts.

See our latest analysis for Canon

The consensus price target held steady at JP¥4,941, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on Canon, with the most bullish analyst valuing it at JP¥6,300 and the most bearish at JP¥3,850 per share. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

Of course, another way to look at these forecasts is to place them into context against the industry itself. It's pretty clear that there is an expectation that Canon's revenue growth will slow down substantially, with revenues to the end of 2025 expected to display 1.5% growth on an annualised basis. This is compared to a historical growth rate of 7.9% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 2.2% 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 Canon.

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. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than 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.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for Canon going out to 2027, and you can see them free on our platform here..

It is also worth noting that we have found 3 warning signs for Canon 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.