Buy Nintendo stock now before the new Switch 2 drives record user growth, Goldman says
Neilson Barnard/Getty Images for Nintendo of America
- Nintendo stock is a buy as the Switch 2 launch nears, says Goldman Sachs.
- Goldman sees the Switch 2 boosting Nintendo's profits and sales to record levels.
- Nintendo's movie ventures and strong balance sheet add to its growth potential.
The Switch 2 is around the corner and investors are going to want to pay attention to the release of Nintendo's next-generation handheld console.
Goldman Sachs resumed its coverage of Nintendo stock this week with a "Buy" rating and a price target of ¥13,600 for the Japanese-listed shares, representing possible upside of 20% from current levels.
ADR-listed shares of Nintendo, which trade under the ticker symbol "NTDOY," surged 4% in Wednesday's trading session to $18.78.
Goldman is encouraged that the Switch 2, which is expected to be released before the holiday shopping season later this year, could drive the company's profits to record levels.
Goldman Sachs
"We look for a further re-rating of Nintendo shares on expectations that the launch of the Switch 2 will drive growth in hardware and software sales, and that user engagement on the Nintendo Switch platform (including the legacy Switch) will remain strong," Goldman Sachs said.
The company is rumored to announce details of the Switch 2 console, including features, launch date, sales price, and launch titles during the Nintendo Direct broadcast on April 2.
Goldman is also encouraged by Nintendo's foray into movies, capitalizing on its deep bench of intellectual property. In 2023, the Super Mario Bros. Movie was released, generating $1.3 billion in worldwide box office revenue.
In a bid to replicate that success, Nintendo has confirmed that a movie based on the Legend of Zelda videogame is in development.
Finally, Goldman highlighted that Nintendo has a clean balance sheet with no debt and an attractive equity ratio of 83%.
The ADR-listed shares of Nintendo are up 28% year-to-date, and up 37% over the past year. The stock is trading near record highs.