Jefferies, a global investment banking firm, adjusted its price target for Sony Corp. (TYO:6758:JP) (NYSE: SONY), reducing it to ¥10,240 from the previous ¥10,570. Despite the price target reduction, the firm has kept its Buy rating on the stock.
The adjustment comes amidst speculation regarding the potential unveiling of a new gaming console from Nintendo. Discussions on various online forums anticipated that the successor to the Nintendo Switch (NYSE:SWCH), tentatively referred to as the "Switch 2," might be presented at either the Nintendo Direct event or at the Tokyo Game Show (TGS) this week. However, according to Jefferies, such expectations may be premature.
The firm's analyst pointed out that, based on the current situation and historical patterns, the window for a Switch 2 showcase is likely closed for now. The analyst anticipates that Nintendo will make the announcement in the fourth quarter of the fiscal year ending March 2025 (FY3/25) and will release the new console by the end of the first quarter of FY3/26, which corresponds to June 2025.
In light of these projections, Jefferies has pushed its estimates for Nintendo's performance out by six months for the fiscal years 2025 and 2026. The delay in the expected announcement and release of the new Nintendo console has implications for the broader gaming industry and market expectations.
Sony (NYSE:SONY), being a major player in the gaming console market with its PlayStation brand, is closely watched by investors for its competitive position against rivals such as Nintendo. The revised price target reflects Jefferies' updated analysis of Sony's future financial performance in the evolving market landscape.
In other recent news, Nintendo and The Pokemon Company have filed a lawsuit against Pocketpair Inc, the developer of "Palworld," alleging patent infringement. The lawsuit seeks an injunction to halt the game's distribution and financial compensation for damages. On another front, Sony Music is close to securing a deal worth an estimated $500 million for the rights to Pink Floyd's recorded music.
The acquisition would add a significant catalog to Sony's portfolio and underscore the value of classic music rights.
Sony has also unveiled its upgraded PlayStation 5 Pro, featuring enhanced graphics and a higher price tag of $699.99. The console, set to launch on November 7, is part of Sony's commitment to the gaming community despite anticipating a decrease in overall PS5 console sales this financial year. Meanwhile, the proposed merger between Disney and Reliance's Indian media assets is facing regulatory hurdles over potential monopolization of cricket broadcast rights.
In recent developments, CFRA upgraded Sony shares from Hold to Buy, raising the stock price target to $102. This follows Sony's Q1 financial results for fiscal year 2025, which met expectations with a net profit increase of 6% and a 2% rise in revenue.
InvestingPro Insights
With Sony Corporation (NYSE: SONY) making headlines in the gaming industry, investors are keeping a keen eye on the company's financial health and market position. According to InvestingPro data, Sony has a market capitalization of $112.12 billion and is trading at a P/E ratio of 16.73, which adjusts to 17.62 on a last twelve months basis as of Q1 2023. This indicates a significant valuation relative to the company's earnings. Additionally, Sony's revenue growth for the last twelve months stood at 11.62%, showcasing the company's ability to increase its sales over time.
InvestingPro Tips highlight Sony's track record of raising its dividend for 9 consecutive years, underscoring the company's commitment to returning value to shareholders. Moreover, Sony's cash flows are robust enough to cover interest payments, reflecting a healthy financial structure. For investors seeking more in-depth analysis, there are over 10 additional InvestingPro Tips available, which can be accessed for Sony at Investing.com/pro/SONY.
As the gaming console market evolves with new product launches and competitive dynamics, these financial metrics and insights from InvestingPro provide a valuable perspective for investors monitoring Sony's performance relative to its peers in the industry.
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