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The Nintendo Switch Will Do Better Than The Nintendo Wii, Analyst Says: Time To Buy Nintendo Stock?

7 June 2017, 11:10 am EDT By Aaron Mamiit Tech Times
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Super Mario Odyssey gameplay trailer | Nintendo Switch

The Nintendo Switch launched in March to a roaring start, a far cry from the failure suffered by the Nintendo Wii U and prompting a forecast from GameStop executive Eric Bright that the hybrid console will do even better than the massively successful Nintendo Wii.

A new investor note from an analyst has echoed the expectation that the Nintendo Switch will lead to higher earnings for Nintendo compared to the Nintendo Wii, urging investors to buy shares in the Japanese video game company.

Nintendo Switch Pushing Nintendo To New Heights

According to an investor note written by Jefferies analyst Atul Goyal, the Nintendo Switch may lead to higher earnings for Nintendo compared to the Nintendo Wii. The hybrid console has become a "stealth hit" and is geared to give the company "Wii-type" software sales and profit cycles.

Goyal added that the appeal of the Nintendo Switch to core gamers, compared to the focus of the Nintendo Wii on casual gamers, will likely lead to higher attach rates and higher earnings for Nintendo from when the Nintendo Wii was its flagship console. Core gamers purchase more titles compared to casual gamers, which has translated to amazing figures such as the over 100 percent attach rate of The Legend of Zelda: Breath of the Wild over the Nintendo Switch's launch month. This is because some players purchased more than one copy of the game, one for collecting and one for playing, while some players bought the game even if they had not yet purchased the hybrid console.

Goyal noted that Nintendo is targeting core gamers with its first-year lineup for Nintendo Switch games. The lineup was actually described "the most powerful and attractive" one for any Nintendo console ever.

In terms of annual operating profit, Goyal forecasts 189 billion yen for Nintendo's fiscal year 2018, significant up from his expected profit of 29 billion yen in fiscal 2017. Goyal, meanwhile, expects Nintendo's profit to balloon even larger from fiscal year 2018 to fiscal year 2019 to 423 billion yen.

Goyal also reiterated his buy rating on Nintendo's stock, as Nintendo U.S.-traded stock have increased by over 50 percent this year and jumped by almost 112 percent over the past 12 months.

Is It Time To Buy Nintendo Stock?

Goyal's analysis of Nintendo's outlook and the continuing demand for the Nintendo Switch are good signs for the future of the company and its stocks, so investors should definitely not pass up a chance to buy shares in Nintendo.

The Nintendo Switch immediately shattered concerns that it will fail like the Nintendo Wii U upon its launch, and the hybrid console has not looked back since. GameStop's Bright believes that the Nintendo Switch is on track to beat the Nintendo Wii, which is the company's most successful console of all time.

One of the few criticisms against the Nintendo Switch is the supply crunch that customers have experienced regarding the hybrid console. Nintendo, however, recently said that it will be ramping up production of the device to meet the additional demand in the upcoming holiday season, which should drive up sales and further brighten Nintendo's future.

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