Earnings Beat: LY Corporation Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Models
A week ago, LY Corporation (TSE:4689) came out with a strong set of quarterly numbers that could potentially lead to a re-rate of the stock. It was overall a positive result, with revenues beating expectations by 2.1% to hit JP¥554b. LY also reported a statutory profit of JP¥8.47, which was an impressive 50% above what the analysts had forecast. 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
After the latest results, the 13 analysts covering LY are now predicting revenues of JP¥2.27t in 2027. If met, this would reflect a meaningful 8.2% improvement in revenue compared to the last 12 months. Statutory earnings per share are forecast to dip 3.1% to JP¥28.68 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of JP¥2.26t and earnings per share (EPS) of JP¥26.47 in 2027. So the consensus seems to have become somewhat more optimistic on LY's earnings potential following these results.
See our latest analysis for LY
There's been no major changes to the consensus price target of JP¥536, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. 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 LY, with the most bullish analyst valuing it at JP¥650 and the most bearish at JP¥470 per share. 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.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the LY's past performance and to peers in the same industry. The analysts are definitely expecting LY's growth to accelerate, with the forecast 11% annualised growth to the end of 2027 ranking favourably alongside historical growth of 7.7% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 8.3% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that LY 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 LY'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 estimates - from multiple LY analysts - going out to 2029, and you can see them free on our platform here.
Plus, you should also learn about the 1 warning sign we've spotted with LY .
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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.