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

Canon Inc. (TSE:7751) shareholders are probably feeling a little disappointed, since its shares fell 4.3% to JP¥4,370 in the week after its latest quarterly results. It looks like a credible result overall - although revenues of JP¥1.1t were in line with what the analysts predicted, Canon surprised by delivering a statutory profit of JP¥71.51 per share, a notable 12% above expectations. 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

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Taking into account the latest results, Canon's ten analysts currently expect revenues in 2026 to be JP¥4.65t, approximately in line with the last 12 months. Statutory earnings per share are predicted to jump 107% to JP¥379. In the lead-up to this report, the analysts had been modelling revenues of JP¥4.65t and earnings per share (EPS) of JP¥375 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.

See our latest analysis for Canon

The analysts reconfirmed their price target of JP¥5,122, showing that the business is executing well and in line with expectations. 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 Canon at JP¥6,400 per share, while the most bearish prices it at JP¥4,200. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.

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 Canon's revenue growth is expected to slow, with the forecast 1.3% annualised growth rate until the end of 2026 being well below the historical 7.8% 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 2.6% annually. 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 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. 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.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Canon analysts - 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 3 warning signs with Canon , 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.