Last week, you might have seen that Alfresa Holdings Corporation (TSE:2784) released its first-quarter result to the market. The early response was not positive, with shares down 5.2% to JP¥2,200 in the past week. It was a workmanlike result, with revenues of JP¥789b coming in 2.3% ahead of expectations, and statutory earnings per share of JP¥230, in line with analyst appraisals. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Alfresa Holdings after the latest results.
Following last week's earnings report, Alfresa Holdings' three analysts are forecasting 2027 revenues to be JP¥3.19t, approximately in line with the last 12 months. Statutory earnings per share are expected to plummet 41% to JP¥131 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of JP¥3.17t and earnings per share (EPS) of JP¥136 in 2027. The analysts seem to have become a little more negative on the business after the latest results, given the minor downgrade to their earnings per share numbers for next year.
View our latest analysis for Alfresa Holdings
It might be a surprise to learn that the consensus price target fell 8.2% to JP¥2,340, with the analysts clearly linking lower forecast earnings to the performance of the stock price. 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 Alfresa Holdings analyst has a price target of JP¥2,500 per share, while the most pessimistic values it at JP¥2,180. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Alfresa Holdings is an easy business to forecast or the the analysts are all using similar assumptions.
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. It's pretty clear that there is an expectation that Alfresa Holdings' revenue growth will slow down substantially, with revenues to the end of 2027 expected to display 2.3% growth on an annualised basis. This is compared to a historical growth rate of 4.2% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 3.8% per year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Alfresa Holdings.
The Bottom Line
The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Alfresa Holdings' revenue is expected to perform worse than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.
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 Alfresa Holdings 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 3 warning signs for Alfresa Holdings (of which 1 is potentially serious!) 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.