Nitto Boseki Co., Ltd. Just Reported A Surprise Loss: Here's What Analysts Think Will Happen Next
It's been a pretty great week for Nitto Boseki Co., Ltd. (TSE:3110) shareholders, with its shares surging 12% to JP¥2,591 in the week since its latest interim results. Revenues came in at JP¥69b, in line with estimates, while Nitto Boseki reported a statutory loss of JP¥89.73 per share, well short of prior analyst forecasts for a profit. 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 gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
Taking into account the latest results, the current consensus from Nitto Boseki's nine analysts is for revenues of JP¥141.0b in 2027. This would reflect a meaningful 9.0% increase on its revenue over the past 12 months. Statutory earnings per share are forecast to crater 54% to JP¥120 in the same period. Before this earnings report, the analysts had been forecasting revenues of JP¥145.0b and earnings per share (EPS) of JP¥118 in 2027. So it's pretty clear that while sentiment around revenues has declined following the latest results, the analysts are now more bullish on the company's earnings power.
See our latest analysis for Nitto Boseki
There's been no real change to the average price target of JP¥4,366, with the lower revenue and higher earnings forecasts not expected to meaningfully impact the company's valuation over a longer timeframe. 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 Nitto Boseki, with the most bullish analyst valuing it at JP¥5,500 and the most bearish at JP¥3,300 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.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. The analysts are definitely expecting Nitto Boseki's growth to accelerate, with the forecast 19% annualised growth to the end of 2027 ranking favourably alongside historical growth of 9.3% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 4.2% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Nitto Boseki to grow faster than the wider industry.
The Bottom Line
The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Nitto Boseki following these results. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than the wider industry. Even so, long term profitability is more important for the value creation process. The consensus price target held steady at JP¥4,366, with the latest estimates not enough to have an impact on their price targets.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for Nitto Boseki going out to 2029, and you can see them free on our platform here.
Even so, be aware that Nitto Boseki is showing 2 warning signs in our investment analysis , you should know about...
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