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From: blacksheep (Rep: 335)Date: 04/24/2017 13:40
Forum: Nintendo - Msg #18Thread #673922961 (Rec: 0)
Why the Stock Could Have 43% Upside-Barrons
Nintendo (7974.JP) is set to unveil fiscal 2016 earnings on Thursday.

By Isabella Zhong
The Wall Street Journal’s Takashi Mochizuki has highlighted the key points that investors should pay attention to in the Japanese gaming giant’s results announcement.

Top of the list is Nintendo’s newest gaming console Switch, which has enjoyed strong demand since its launch on March 3.

Switch’s strong start prompted JPMorgan analyst Haruka Mori to raise her target price on Nintendo from JPY29,000 a share to JPY39,000 a share last week. Mori’s new target price implies a towering 43% upside.

Mori now expects Nintendo to earn JPY290 billion in fiscal 2019, up from an earlier estimate of JPY194 billion:

We revise our Switch sales volume estimates to 13 million in FY2017 (previously 10 million), 17 million in FY2018 (13 million), and 14.5 million in FY2019 (12 million). We previously expected the device to capture Nintendo game fans based on a full lineup of first-party titles, but we raise our sales estimates in view of the potential for sales as a handheld device (possible demand for more than one device per household) and for capturing core gamers (assessments of convenience seem better than expected). Reflecting this upward revision, we raise our operating profit estimates from ¥72 billion to ¥112 billion in FY2017 and from ¥194 billion to ¥290 billion in FY2019, the cycle peak.

Nintendo shares are up 12% this year and trade at 37 times forward earnings, which is below a five-year average of 51 times.

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