Nintendo is the 'cheapest game stock in the world'

  • Nintendo is the “cheapest game stock in the world” according to Jefferies.
  • Nintendo gave conservative operating profit guidance for the next year.
  • The company announced named Shuntaro Furukawa, who used to be in-charge of corporate analysis and marketing, president.
  • Watch Nintendo trade in real-time here.

Nintendo is the “cheapest game stock in the world,” Jefferies analyst Atul Goyal wrote in a note. The company has a ¥6.43 trillion ($US58.7 billion) market cap and is trading at ¥46,370 a share ($US424.15).

The electronics and video game company posted 2018 fiscal year results which included 2018 third-quarter operating profit of ¥178 billion that beat consensus of ¥169 billion by 67%.

Though the company issued conservative operating profit guidance and the stock declined 2% Thursday, Goyal sees upside to the company’s operating profit and reiterates his buy rating. He maintains his 12-month price target of ¥79,900, which exceeds the average analyst price target of ¥59582 according to Bloomberg.

“We believe OP could more than triple in 2 years, driven by cyclical (Switch) and structural (digital adoption for console games; mobile game revenues) factors,” he wrote.

Additionally, the company added Pokemon to its list of upcoming releases. The game is set to debut in 2018 or later. “If this happens, then final Switch shipment for FY3/19e could well exceed co-guidance of 20m (we are at 18.5m as of now),” Goyal noted.

He added the company sold 15.1 million Switch during this past quarter, which adds up to a record 18 million consoles in the first 13 months.

Nintendo also announced it’s president, Tatsumi Kimishiwa, is stepping down later this year, and will be replaced by Shuntaro Furukawa, who was formerly in-charge of corporate analysis and marketing.

“We are as excited for Nintendo’s future as we were for Sony’s future back in 2014 when we found that Mr. Yoshida had taken over as CFO for Sony,” Goyal wrote.

Nintendo shares are up 5.14% this year.

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