Credit Suisse Upgrades Nintendo to “Outperform”

According to Barron’s Asia (link), Swiss multinational financial service firm, Credit Suisse, has upgraded Nintendo’s performance from ‘Neutral’ to ‘Outperform’. This comes as Nintendo saw great success with their latest portable home-console, the Nintendo Switch and as uncertainty over its success fades.

From Keiichi Yoneshimai, an analyst from Credit Suisse:

“As Nintendo’s Switch is a unique game platform for use as either a console or handheld, there was initially some uncertainty over whether its sales cycle would more closely resemble that of a console or handheld. Although the Switch is currently categorized as more of a console, we expect it to sell like a handheld. Many users are in fact using the Switch as a portable according to a Famitsu survey of users. We previously projected a sales peak at about three years after launch (i.e., in FY3/19) on the assumption of a console-like sales cycle. Now that the Switch looks more likely to sell like a handheld, we update our sales forecast to reflect a longer sales cycle. We now expect the Switch to achieve peak sales about five years after launch (i.e., around FY3/20–21) like a typical handheld game device. We also raise our peak-year sales forecast from 25mn to 31mn units.”

In fact, Credit Suisse is optimistic that Nintendo can ship 130 million units by 2022, up from their original estimation of 70 million. That is greater than the Wii’s lifetime sales of 101 million units.

Another investment company, Jeffries shared Credit Suisse’s sentiments as well, saying that Nintendo has really gotten back support from third-party developers with the Switch.

From Jefferies analyst Atul Goyal:

“It was a surprise when Take Two studio Rockstar (creator of GTA and Red Dead Redemption) announced L.A. Noire game for Switch (in addition to launch on PS4 and XBO). This is a sign that Nintendo platform is expected to be big and attractive enough for third party developers to dedicate resources towards game development for Switch.”

Nintendo has given themselves an internal target of shipping 10 million Switch Consoles before their fiscal year ends in March 2018. Whether or not they can reach Credit Suisse’s optimistic forecast will really depend on their ability to manufacture enough Nintendo Switches and whether or not they can keep third-party developers interested.