Nintendo’s battered stock could turn around
the stock has had a nasty summer, falling 16% since early July, with investors wondering how much potential the video game company has left. But according to a Jefferies analyst, a few positive events could help the stock.
The stock has been damaged, in part, by weak sales of the flagship Nintendo Switch console, which is now over four years old and apparently not destined for an upgrade scheduled for this fall. Jefferies analyst Atul Goyal lowered his target stock price to 58,500 (533.39 yen) from 62,800, and kept his neutral rating on the name.
Nonetheless, he said, investors should remain nimble about their positions. The potential benefit, Goyal said, is linked to two events. The first is the launch of Pokemon unite, a free multiplayer online game that became available for the Switch last month. Critics’ reviews were initially mixed, when the game was only available on this platform.
But Goyal said the game’s launch on Android and iOS, slated for September 22, could prove to be a success. The game includes short 10-minute battles and features that allow players to buy more power into the game, features that Goyal says are suitable for mobile platforms. Despite the likely relatively small contribution to revenue, mobile Unite the launch could excite a larger retail investor base than the company’s history.
The second event that could raise the share price is Nintendo’s potential inclusion in the Nikkei 225 Stock Average, Goyal said. According to Bloomberg News, the stock has not been included in the benchmark so far due to concerns about its high stock price – it trades at around $ 485 in Japan. But Nikkei made a change in July that will pave the way for the inclusion of stocks. So far, speculation about Nintendo adding to the Nikkei has not helped the stock.
Goyal said the risks associated with both catalysts are sufficient to maintain its rating at Neutral. He said any gain from inclusion in the Nikkei could be short-lived. And, he said, the mobile launch of Unite probably won’t have a big impact on income. Goyal added that like many people who follow Nintendo, he also expected Nintendo to drop the price of its Switch console when the company released a new version with a better screen for an additional $ 50, but that didn’t is not the case.
Nintendo’s U.S. Certificates of Deposit closed 0.3% higher at $ 60.52 on Tuesday.
Write to Max A. Cherney at [email protected]