‘Load Up,' Says Jefferies About Nintendo Stock

Business Insider

3 days ago

Nintendo (TYO:7974) shares have been hitting fresh highs in recent weeks with investors' enthusiasm mirroring the success of the company's' newly released Switch 2.
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Released in early June, the new console has quickly taken the gaming world by storm, with 3.5 million units sold in just four days, making it the fastest-selling console in the company's history. Investor enthusiasm has followed suit, driving the stock up 40% year-to-date.
That milestone didn't just break internal records, it set a new global benchmark. For comparison, the original Switch sold 2.74 million units in its first full month, the PS4 hit 2.1 million in two weeks, and the PS5 moved 3.4 million units in its debut month.
Such momentum is setting the stage for long-term growth, according to Jefferies analyst Atul Goyal.
'The NS2 trajectory is shaping up to be meaningfully above that of Switch and bodes well for profit growth for the years ahead,' the 5-star analyst said.
In light of the early strong performance, Goyal has revised his cumulative sales forecast for the Switch 2, raising it from 66 million to 69 million units over the next three fiscal years ending March 2028. His new annual projections call for 18 million, 23 million, and 28 million units, respectively – numbers that already seem well within reach, considering Nintendo has achieved 20% of the FY3/26 target in less than a week.
That early success is no accident. The Switch 2 builds on the legacy of the original 2017 console, but comes with broader anticipation and tighter execution. Reports of long lines and rapid sellouts have emerged worldwide, though Nintendo's decision to stockpile inventory ahead of the U.S. launch helped mitigate supply shortfalls.
'This should bode very well for earnings growth,' says Goyal. 'A higher install-base combined with strong game pipeline is likely to drive earnings growth much higher than the pace and magnitude of Switch.'
Nintendo has also unveiled Splatoon Raiders, a new Splatoon spin-off and the franchise's first-ever spin-off title, which will be available exclusively on the Switch 2. That further strengthens what is already an 'incredibly strong' first-party lineup this year with Goyal believing the tie-ratio – meaning the average number of games purchased per console – probably 'has the making of a big upward surprise.'
Taking all this into account, Goyal rates Nintendo shares a Buy with a ¥20,780 ($142.85) price target, implying a 53% upside over the next year. (To watch Goyal's track record, click here)
Elsewhere on the Street, Nintendo stock claims an additional 6 Buys, 2 Holds and 1 Sell, for a Moderate Buy consensus rating. However, the ¥13,367.81 ($91.9) average price target implies the shares will stay rangebound for the time being. (See Nintendo stock forecast)
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