Here's What Analysts Are Forecasting For Disco Corporation (TSE:6146) After Its First-Quarter Results
Last week, you might have seen that Disco Corporation (TSE:6146) released its quarterly result to the market. The early response was not positive, with shares down 6.0% to JP¥60,890 in the past week. It looks like the results were a bit of a negative overall. While revenues of JP¥114b were in line with analyst predictions, statutory earnings were less than expected, missing estimates by 2.4% to hit JP¥316 per share. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Taking into account the latest results, the current consensus from Disco's 21 analysts is for revenues of JP¥548.5b in 2027. This would reflect a decent 19% increase on its revenue over the past 12 months. Per-share earnings are expected to surge 28% to JP¥1,716. Yet prior to the latest earnings, the analysts had been anticipated revenues of JP¥542.3b and earnings per share (EPS) of JP¥1,679 in 2027. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.
Check out our latest analysis for Disco
The consensus price target was unchanged at JP¥84,380, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. 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. The most optimistic Disco analyst has a price target of JP¥120,000 per share, while the most pessimistic values it at JP¥68,000. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
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 Disco's rate of growth is expected to accelerate meaningfully, with the forecast 26% annualised revenue growth to the end of 2027 noticeably faster than its historical growth of 15% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 18% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Disco is expected to grow much faster than its industry.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Disco's earnings potential next year. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster 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. We have forecasts for Disco going out to 2029, and you can see them free on our platform here.
And what about risks? Every company has them, and we've spotted 1 warning sign for Disco 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.