Nintendo Switch is selling like hot cakes right now setting record numbers for the Japanese company, but is the trend set to continue for the future?
Jefferies’ Atul Goyal, often called “Nintendo’s biggest bull on Wall Street,” has reduced sales target for the company by over 10%. He told investors to stay committed to the stock but sales could slow down sooner than expected.
Market expectations for Switch, as reflected in stock price, have turned from robust growth to no-growth in a matter of three months.
He still claims that the stock is excellent considering his predicted targets.
The stock was previously predicted for 71,200 yen ($640.45), Goyal reduced this to 64,200 yen ($577.48). Meanwhile Nintendo’s stock is currently trading at 38,000 yen ($341.83).
We believe continued sales of Switch over the course of this year and next could very well prove this current thesis of Switch being ex- growth wrong as well,
But given the sustained selling pressure, perhaps the short-term market is right about Nintendo (for a change) and perhaps it doesn’t grow in hardware sales.
No other company in our coverage is experiencing such growth and trading at such low multiples,
Nintendo Switch has only 1 year in the bag and 4-5 years more to go, with benefits from cycle and structural (digital) upside. Mobile, China, Online are some other potentially large drivers.
Considering the console hasn’t even gotten its first Pokemon or Animal Crossing game, I’m not really sure if sales will go down anytime soon. Plus there’s Fire Emblem, Metroid and Bayonetta that could release next year.
Still things certainly look up for Nintendo and the Switch even if sales are gonna slow down.