Jefferies analyst Atul Goyal has recently urged his company’s clients to purchase Nintendo stock. He firmly believes that the Nintendo Switch could earn the Kyoto-based company a lot more money than the Wii highlighting potential higher attach rates for the reason behind this estimate. Goyal sent out a letter to his clients stating the following:
Switch has turned out to be a stealth hit and is positioned to drive Wii-type [the company’s last successful console] software sales and profits cycle. Switch’s appeal to core-gamers (vs. Wii to casual gamers) is likely to drive higher attach-rate and higher earnings than Wii-era.
Nintendo is also actively targeting and courting its core-gamers with a very powerful game line-up in the year 1 of Switch’s launch. We believe this is the most powerful and attractive line-up of any Nintendo game console ever.
The analyst also points out that Nintendo’s Japanese shares rose more than 300 percent in the 12 months following the release of the Wii back in 2006, and compared this to the 25 percent jump since the Switch’s March launch. Goyal also predicts that Nintendo’s annual operating profit will rise to 189 billion yen in fiscal 2018 and 423 billion yen in fiscal 2019 versus his estimated 29 billion yen in fiscal 2017.