Nintendo Raised to Outperform by Credit Suisse | Investopedia – Investopedia
Credit Suisse is betting Nintendo (NTDOY) will probably sell more Switch game consoles than previously expected, leading the firm to up its investment rating to outperform.
CS also raised its price target on the stock to JPY55,000 ($494.45) a share from JPY40,000 ($395.56) a share, which implies more than 40 percent upside from current levels. The firm thinks the Japanese gaming company will sell 130 million Switch game consoles through 2022, nearly double the 70 million units previously expected. (See also: Top Video Game Stocks for 2017)
“As Nintendo’s Switch is a unique game platform for use as either a console or handheld, there was initially some uncertainty over whether it’s sales cycle would more closely resemble that of a console or handheld,” wrote Credit Suisse analyst Keiichi Yoneshima in a research report covered by Barron’s. “Although the Switch is currently categorized as more of a console, we expect it to sell like a handheld.”
The analyst pointed to a survey conducted by Famitsu, the Japanese video game magazine publisher, which showed that many Switch users consider it a portable device. Credit Suisse had previously forecast sales of the the gaming device to peak in around three years following the launch, assuming it would have a console-like sales cycle, but with it being viewed more as a portable, handheld device, it thinks the Switch has a longer sales cycles in the cards. “We now expect the Switch to achieve peak sales about five years after launch like a typical handheld game device. We also raise our peak-year sales forecast,” wrote the analyst, raising his estimates for peak year unit shipments to 31 million from 25 million.
Ever since Nintendo launched Switch back in March, the device has been hugely popular, even selling out in some parts of the world. The overwhelming demand for the game console has prompted the company to boost production to ensure there are enough to go around this holiday season. The Wall Street Journal reported in March that companies assembling the Nintendo Switch planned to manufacture 16 million more units due to demand. Originally, the plan was to assemble 8 million units for all of 2017. (See also: Report: Nintendo Will Double Switch Production)
Its popularity was underscored by new research from NPD Group which showed that during August, Switch outsold the PS4 and the Xbox One and is now the top-selling game console in the U.S, reported mobile and consumer electronics markets news site BGR. This is the fourth time in the last six months that Nintendo is the number one game console for U.S. consumers.