Kioxia Holdings Corporation (TSE:285A) shareholders are probably feeling a little disappointed, since its shares fell 9.6% to JP¥11,345 in the week after its latest interim results. It looks like a pretty bad result, all things considered. Although revenues of JP¥4.2t were in line with analyst predictions, statutory earnings fell badly short, missing estimates by 30% to hit JP¥838 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Taking into account the latest results, the consensus forecast from Kioxia Holdings' 16 analysts is for revenues of JP¥9.97t in 2027. This reflects a major 72% improvement in revenue compared to the last 12 months. Per-share earnings are expected to bounce 99% to JP¥3,350. Yet prior to the latest earnings, the analysts had been anticipated revenues of JP¥10t and earnings per share (EPS) of JP¥3,486 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 Kioxia Holdings
It might be a surprise to learn that the consensus price target fell 6.2% to JP¥34,648, 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. There are some variant perceptions on Kioxia Holdings, with the most bullish analyst valuing it at JP¥52,000 and the most bearish at JP¥16,333 per share. With such a wide range in price targets, analysts are almost certainly betting on widely divergent outcomes in the underlying business. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Kioxia Holdings' past performance and to peers in the same industry. It's clear from the latest estimates that Kioxia Holdings' rate of growth is expected to accelerate meaningfully, with the forecast 196% annualised revenue growth to the end of 2027 noticeably faster than its historical growth of 25% 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. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Kioxia Holdings to grow faster than the wider industry.
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. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Kioxia Holdings' future valuation.
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 Kioxia Holdings analysts - going out to 2029, and you can see them free on our platform here.
Even so, be aware that Kioxia Holdings is showing 1 warning sign in our investment analysis , you should know about...
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