Bernstein reiterated its Outperform rating on Nintendo Co Ltd (TYO:7974:JP) (OTC: NTDOY (OTC:NTDOY)) with a steady price target of JPY10,000.00. The firm acknowledged that Nintendo's shares have not performed as strongly in recent times, attributing the lackluster performance to investors shifting their attention from the anticipation of the Switch (NYSE:SWCH) 2 console to concerns about near-term earnings.
Despite a perceived downturn in the sales of Switch hardware, Bernstein highlighted that software sales have seen sequential improvement, which is considered more significant for Nintendo's earnings.
The firm has adjusted its fiscal year 2025 estimates for Nintendo downward, yet it emphasized the value seen in Nintendo's current trading multiples, noting the company's price-to-book (PB) ratio of 3.2x and forward price-to-earnings (PE) ratio for fiscal year 2026 estimated at 20.3x, based on what it deems conservative expectations for the Switch 2.
Bernstein underscored the potential of Nintendo's stock, especially in the event of any earnings-related declines. The firm's position is buoyed by reports from Digital Foundry, which has described the recent leaks regarding the Switch 2 as "almost certainly real," hinting at the possibility of an upcoming hardware reveal.
Nintendo's financial health and market performance are closely watched by investors, particularly as the company approaches the end of its fiscal year on March 31, 2025. The gaming giant's next moves, including the launch of new hardware and software offerings, are anticipated to have a significant impact on its stock value and market position.
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