Nintendo’s stock could rise by 30%, say analysts
Japanese video game company Nintendo ‘s stock price could rise by over 30% in the next 12 months if its highly anticipated console proves a success, according to equity analyst David Gibson. Gibson, a senior research analyst at financial services firm MST Marquee, has set a price target of 11,000 Japanese yen ($74) for Nintendo’s stock. This represents a 31% upside over the current price. Nintendo shares also trade in the United States and Germany. Gibson believes the upcoming successor to Nintendo’s popular Switch console, dubbed the “Switch 2” by industry watchers, will be the primary driver of growth if it replicates the original Switch’s success, which currently has 122 million users. 7974.T-JP 1Y line Along with a new console, Nintendo stands to benefit from its expansion into theme parks and movies based on its popular game franchises, such as Super Mario, according to Gibson. Super Nintendo World, a theme park operated by Universal Parks & Resorts, is set to open in Florida next year. That’s on top of the recent release of the animated “Super Mario Bros. Movie,” which has grossed over $1 billion worldwide. Risks to Nintendo shares Success for Nintendo shareholders isn’t set in stone yet. Gibson noted that if the timing of the Switch 2 is pushed to 2025, investors may react negatively in the short term because of an expected decline in earnings over the next two years as the current Switch console grows stale. Jefferies analyst Atul Goyal echoed that view in a recent research note. He told the investment bank’s clients that Nintendo could delay the Switch 2 launch if the momentum for the current console remains strong. Goyal has set a buy rating and price target of 10,520 yen. “We have maintained our view that we are very close to seeing Nintendo refresh its hardware console. But it should/would do so only when the momentum of current console is weakening,” Goyal wrote in a note to clients on Feb. 6, immediately after Nintendo released its latest quarterly results. While Nintendo beat analysts’ expectations on top and bottom lines, the Japanese gaming giant also raised its forecast to sell 15.5 million console units in its current fiscal year. ‘Switch 2’ launch Even if Nintendo were to launch the Switch 2 this year, as CNBC has previously reported , Citi analyst Junko Yamamura sees several hurdles for the company. In a recent research note to clients, she highlighted some risks around a potential decline in sales during the transition between the console generations. The analyst has rated Nintendo a buy but set a conservative price target of 8,400 yen. To drive adoption of the new console at launch, Gibson said Nintendo will likely have “pressure on for them to deliver a really stellar game” — possibly another Mario or Zelda title — that will be paired with the device. However, if the new console fails to gain traction with consumers, Gibson cautioned that Nintendo’s stock is likely to miss his price target. — CNBC’s Arjun Kharpal contributed to this report.