On Monday, Jefferies showed a vote of confidence in Sony Corp (TYO:6758). (6785:JP) (NYSE: SONY) shares, raising its price target to JPY19,450 from JPY19,250. The firm sustained a Buy rating on the stock, signaling optimism about Sony (NYSE:SONY)'s future earnings potential, particularly in its Games and Music divisions.
The bullish stance comes after a discussion with Sony executives, which reinforced the analyst's positive outlook. Contrary to some newer investors' belief that Sony's Game division is on the decline, Jefferies argues that the reality is quite the opposite. The firm anticipates growth in earnings driven by software growth, increasing subscription revenue, and margin expansion.
Sony's gaming business, particularly with its PlayStation 5 hardware, is expected to perform well despite guidance suggesting a decline. Jefferies contends that the company is well-positioned for earnings growth within this sector.
In addition to gaming, Sony's Music division is also expected to benefit from external factors such as Spotify (NYSE:SPOT)'s price increase. This development is likely to have a favorable impact on Sony's revenues, as the company stands to gain from the rising prices in the streaming market.
The revised price target reflects Jefferies' increased estimates and confidence in Sony's earnings trajectory. The firm's analysis suggests that Sony is poised for sustained profitability and growth in its key business segments.
In other recent news, Simply Good Foods Company reported a 3.1% increase in net sales in its fiscal third-quarter results, amounting to $334.8 million. This growth was largely driven by volume expansion of the Quest brand. Additionally, the company saw a significant rise in gross margin to 39.9%, credited to reduced costs for ingredients and packaging.
The recent acquisition of OWYN is expected to contribute $25 million to $30 million to the fourth-quarter net sales. Despite projected gross margin compression in fiscal 2025 due to input cost inflation, Simply Good Foods reaffirmed its full-year forecast, predicting an approximate 8% growth in adjusted EBITDA.
On the downside, the company anticipates a decline in international net sales by 2.4% and a decline in Atkins brand performance in fiscal year 2025 due to lower ROI trade and marketing investments.
However, the company plans to manage these challenges through strategic decisions focused on brand development and market adaptation, including the optimization of investment levels for Atkins in fiscal 2025 for sustained profitability.
These recent developments reflect the company's commitment to long-term growth despite challenges posed by inflation and competitive pressures.
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