Goods of Nintendo strategy character Isabelle, known as Shizue in Japan, from the Animal Crossing series of video games are displayed at a new Nintendo depend on during a press preview in Tokyo on November 19, 2019.
BEHROUZ MEHRI | AFP via Getty Images
Shares of Japanese video game maker Nintendo gained 2.58% on Friday.
The institution reported Thursday a multi-fold increase in quarterly profit on the back of strong demand for its flagship Switch console. The uncontested success of its social simulation game “Animal Crossing: New Horizons” also helped boost sales.
Nintendo’s managing profit for the three months ended June 30 came in at 144.737 billion yen (approx. $1.37 billion). It was much higher than an normal estimate of 71 billion yen, according to a Refinitiv SmartEstimate quoted by Reuters.
Meanwhile, “New Horizons,” the latest iteration of the Brute Crossing, has already sold 22.4 million units. It jumped to second position among the top selling Switch games, as of June 30, notwithstanding the game only launching in March this year.
Nintendo’s Switch enjoyed strong sales during the coronavirus lockdown globally. The cross-breed console, launched in March 2017, allows gamers to play either on-the-go, or connected to an external screen. Garage sales for the device has been strong as the wider video game industry saw a spike in demand during the initial wave of lockdowns globally to check the spread of the coronavirus pandemic.
Analysts, however, appear divided on the outlook for the firm.
Atul Goyal, a managing maestro at Jefferies, has a “hold” rating on Nintendo’s stock. He told CNBC’s “Street Signs” on Thursday, before Nintendo’s earnings present, that he expects sales of Switch to peak next year.
“I ran with (Nintendo) as in buy, highest conviction buy alongside Sony for the closing five years,” the analyst said. That changed recently as Nintendo is “not doing enough” outside its core soothe gaming sector, he said.
“Console gaming is great for (Nintendo) right now, but you’re heading to a peak next year,” Goyal said.
In all events, Nomura analyst Junko Yamamura has a “buy” rating on Nintendo’s stock.
“We revise up out forecasts based on Apr-Jun results and common conditions. This is mainly because progress with the lengthening of the hardware and software lift cycles has exceeded our expectations,” Yamamura put in blacked in a note dated Friday.