Market players gravitated to Nintendo (NTDOY 3.26%) stock at the close of the trading week following the initiation of coverage by a major bank. This helped push the storied video game company’s stock more than 3% higher on Friday, easily beating the S&P 500 index’s nearly 0.3% decline.
Thumbs-up from Chase
The initiating party was one of the “big four” American banks — JPMorgan Chase. Before market open, the bank’s analyst Junko Yamamura kicked off coverage of Nintendo’s Japan-listed stock with an overweight — buy, in other words — recommendation at a price target of 11,600 yen ($74.21) per share. That suggests potential upside of 17% over the stock’s current level.
The reasoning behind Yamamura’s bullish take on Nintendo wasn’t immediately apparent. It comes at a time when many eyes are on the company, as it just took the wraps off its long-awaited Switch 2 hybrid video game system. The product is sure to be an improvement over the original — and highly popular — Switch, released in early 2017.
Following Nintendo’s reveal, several analysts became more bullish about the company’s prospects, not least due to anticipated Switch 2 sales.
Turning on the Switch
Unless Nintendo completely drops the ball, Switch 2 should be a strong seller. The original Switch has sold over 146 million units, which by any standard constitutes a runaway success; so far, there’s little reason to believe the sequel will be any less popular.
I don’t think Nintendo will flub this, as the Switch 2 is far too important to its future to fail. It also remains a unique product in a video game world dominated by traditional consoles. I’d be bullish on its potential, too.
JPMorgan Chase is an advertising partner of Motley Fool Money. Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends JPMorgan Chase. The Motley Fool recommends Nintendo. The Motley Fool has a disclosure policy.
