On Thursday, CLSA adjusted its price target for Sony Corp. (TYO:6758:JP) (NYSE: SNE) shares, reducing it slightly to JPY3,070.00 from the previous JPY3,100.00. Despite the change, the firm maintained its Outperform (2) rating on the stock. The revision comes after CLSA updated its second-quarter forecasts for Sony (NYSE:SONY), taking into account industry data and the earnings reports of peers.
The analyst at CLSA predicts that Sony will report an operating profit (OP) of JPY356 billion for the second quarter, surpassing the consensus estimate of JPY335 billion reported by Bloomberg. The expected outperformance is attributed to strong results in the Imaging & Sensing Solutions (I&SS) segment and contributions from the Pictures and Music divisions.
The analyst notes that while there may be slight room for improvement in the full-year operating profit guidance for the fiscal year ending March 2025, mainly within the games division, significant changes are not anticipated due to uncertainties surrounding the launch of the PlayStation 5 Pro.
The firm has made minor adjustments to its estimates for Sony and has trimmed its sum-of-the-parts (SOTP) based target from JPY3,100 to JPY3,070. The analyst's commentary highlights the belief that Sony's stock remains defensive, indicating stability, but it is not expected to have major upside catalysts in the near future. The mention of the PS5 Pro launch suggests that the market is awaiting more information on the product before any major shifts in guidance or stock movement can be expected.
InvestingPro Insights
Recent data from InvestingPro sheds additional light on Sony's financial performance. For the last twelve months as of Q2 2024, Sony reported revenue of $39.04 billion, with a modest growth of 1.99% compared to the previous period. The company's gross profit margin stands at a healthy 42.31%, indicating strong pricing power and cost management.
An InvestingPro Tip highlights that Sony's revenue growth has been accelerating, which aligns with the analyst's positive outlook on the company's performance across various segments. Another InvestingPro Tip notes that Sony is trading at a low P/E ratio compared to near-term earnings growth, suggesting potential undervaluation despite the recent price target adjustment.
These insights complement the CLSA analysis, particularly regarding the expected strong performance in specific divisions. Investors seeking a more comprehensive analysis can access additional tips on InvestingPro, where 14 more tips are available for Sony, offering a deeper dive into the company's financial health and market position.
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