Goldman Sachs Group Inc. became the latest broker to downgrade Nintendo Co. as the market awaits the successor to its aging Switch game console.
(Bloomberg) — Goldman Sachs Group Inc. became the latest broker to downgrade Nintendo Co. as the market awaits the successor to its aging Switch game console.
The rating cut to neutral from buy by Goldman pushed the consensus analyst opinion on Nintendo to the lowest since July 2016. Its stock fell as much as 1.4% Tuesday following the downgrade, headed for its lowest close since December 2021.
“Demand for the Nintendo Switch has been slowing more markedly than we had previously assumed,” analyst Minami Munakata wrote in a note. “We assume a lull leading up to the launch of the next-generation game console” sometime in the fiscal year ending March 2025, she added.
Nintendo shares are down 7.2% so far this year compared with a 5.6% gain in the benchmark Topix.
Nintendo Cuts Outlook as Questions About a Switch Successor Grow
Analysts have grown increasing bearish since the company cut its earnings outlook earlier this month. The report from Goldman, which also lowered its earnings estimates and price target for Nintendo, follows downgrades by Citigroup Inc. and at least two local brokerages.
Sales of the Switch, which was launched in 2017, have declined over the past two years. Inflation and normalization after the pandemic demand boost have hurt the game market, as well as “a tendency to tighten spending more than before on catalog titles lacking freshness,” Goldman said.
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