On Monday, Jefferies, a global financial services firm, updated its outlook on Nintendo Co Ltd (TYO:7974:JP) (OTC: NTDOY), raising the price target slightly to JPY10,570 from the previous JPY10,520. The firm maintains a Buy rating on the stock, which is currently trading near its all-time high, just 3% below the peak of JPY9,000.
The adjustment comes amidst expectations of the launch of the much-anticipated "Switch2," the successor to Nintendo's popular gaming console. Jefferies projects a 70% probability of the new console's release occurring around October or November of 2024. There is also a 25% chance of a launch in March or April of 2025, with a 5% probability of it happening after April 2025.
The firm expressed a cautious optimism, suggesting that if Nintendo's performance remains strong in the first half of the year, it could indicate a later release date for the Switch2 in the calendar year 2025. According to Jefferies, such a scenario might be perceived negatively by investors in the near term, as the anticipation of new product launches often drives stock performance.
In other recent news, Nintendo Co (OTC:NTDOY) Ltd faced a price target cut by Benchmark, which revised it down to JPY8,500 from the previous JPY9,100. This revision came after Nintendo's fiscal 2024 earnings report, which was in line with expectations, but the fiscal 2025 forecast fell short of consensus estimates. Notably, the company's forecast seemed to underestimate the potential impact of the anticipated launch of the Switch (NYSE:SWCH) 2 console.
Nintendo has announced plans to unveil a successor to the Nintendo Switch within this fiscal year, a move that has generated significant interest in the gaming community and among industry observers. However, the company's upcoming Nintendo Direct event in June will focus solely on the software lineup for the year 2024, excluding any discussion about the new console.
This strategy suggests that Nintendo is working to strengthen its content offerings ahead of the new hardware's introduction. The gaming industry is closely monitoring these developments, as the original Nintendo Switch has been a major sales driver for the company.
InvestingPro Insights
As Nintendo Co Ltd (OTC: NTDOY) approaches its historical stock price peak, investors are keenly observing the company's financial health and market performance. According to InvestingPro data, Nintendo boasts a robust market capitalization of 64.89 billion USD, with a P/E ratio of 20.69, indicating that the stock is trading at a premium relative to its earnings. Notably, the company has shown a gross profit margin of 57.08% over the last twelve months as of Q4 2024, underscoring its ability to maintain profitability.
InvestingPro Tips highlight that Nintendo holds more cash than debt, suggesting a strong balance sheet, and has maintained dividend payments for 44 consecutive years, reflecting its commitment to shareholder returns. Additionally, the company is seen as a prominent player in the Entertainment industry, with liquid assets that exceed its short-term obligations. However, analysts anticipate a sales decline in the current year, which is an essential factor for investors to consider.
For those interested in deeper analysis and additional tips, InvestingPro offers more insights on Nintendo, including a total of 11 tips that can further inform investment decisions. To access these insights and benefit from the full range of features, readers can use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. This promotion provides a valuable opportunity for investors to stay ahead with comprehensive data and expert analysis.
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