Earnings Release: Here's Why Analysts Cut Their Keisei Electric Railway Co., Ltd. (TSE:9009) Price Target To JP¥4,900

Investors in Keisei Electric Railway Co., Ltd. (TSE:9009) had a good week, as its shares rose 6.2% to close at JP¥4,056 following the release of its half-year results. Results look mixed - while revenue fell marginally short of analyst estimates at JP¥78b, statutory earnings were in line with expectations, at JP¥525 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

View our latest analysis for Keisei Electric Railway

Taking into account the latest results, the current consensus from Keisei Electric Railway's four analysts is for revenues of JP¥324.1b in 2025. This would reflect a reasonable 5.7% increase on its revenue over the past 12 months. Statutory earnings per share are forecast to plummet 44% to JP¥301 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of JP¥315.4b and earnings per share (EPS) of JP¥302 in 2025. So it looks like there's been no major change in sentiment following the latest results, although the analysts have made a modest lift to to revenue forecasts.

As a result, it might come as a surprise that the consensus price target has been cut 6.9% to JP¥4,900, which could suggest that these earnings are considered less valuable by the market than previously. 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. The most optimistic Keisei Electric Railway analyst has a price target of JP¥6,000 per share, while the most pessimistic values it at JP¥4,000. 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.

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 clear from the latest estimates that Keisei Electric Railway's rate of growth is expected to accelerate meaningfully, with the forecast 12% annualised revenue growth to the end of 2025 noticeably faster than its historical growth of 3.8% p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 2.8% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Keisei Electric Railway to grow faster than the wider industry.

The Bottom Line

The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Happily, they also upgraded their revenue estimates, and are forecasting them to grow faster than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Keisei Electric Railway's future valuation.

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 Keisei Electric Railway analysts - going out to 2027, and you can see them free on our platform here.

And what about risks? Every company has them, and we've spotted 3 warning signs for Keisei Electric Railway (of which 2 can't be ignored!) you should know about.

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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.