DeNA Co., Ltd. (TSE:2432) came out with its quarterly results last week, and we wanted to see how the business is performing and what industry forecasters think of the company following this report. It looks to have been a decent result overall - while revenue fell marginally short of analyst estimates at JP¥37b, statutory earnings beat expectations by a notable 402%, coming in at JP¥333 per share. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
Following last week's earnings report, DeNA's four analysts are forecasting 2027 revenues to be JP¥144.2b, approximately in line with the last 12 months. Statutory earnings per share are expected to drop 11% to JP¥399 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of JP¥152.3b and earnings per share (EPS) of JP¥188 in 2027. While revenue forecasts have been revised downwards, the analysts look to have become more optimistic on the company's cost base, given the very substantial lift in to the earnings per share numbers.
See our latest analysis for DeNA
The consensus price target fell 14% to JP¥2,565, with the analysts signalling that the weaker revenue outlook was a more powerful indicator than the upgraded EPS forecasts. 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. Currently, the most bullish analyst values DeNA at JP¥3,100 per share, while the most bearish prices it at JP¥2,070. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await DeNA shareholders.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the DeNA's past performance and to peers in the same industry. We would highlight that DeNA's revenue growth is expected to slow, with the forecast 1.0% annualised growth rate until the end of 2027 being well below the historical 4.1% p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 3.9% annually. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than DeNA.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around DeNA's earnings potential next year. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will perform worse than the wider industry. Still, earnings are more important to the intrinsic value of the business. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of DeNA's future valuation.
With that in mind, we wouldn't be too quick to come to a conclusion on DeNA. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple DeNA analysts - 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 2 warning signs for DeNA (of which 1 is concerning!) 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.