A man pathways past the logo of Japans Sony displayed at the company’s showroom in Tokyo on October 28, 2020.
KAZUHIRO NOGI | AFP via Getty Personifications
SINGAPORE — Shares of Sony surged in Tokyo on Thursday, a day after the Japanese electronics giant raised its annual profit calculation.
Sony shares in Japan were up 6.3% in Thursday afternoon trade even though Japan’s broader clue, the Nikkei 225, was lower by around 0.3%
On Wednesday, Sony raised its forecast for its annual operating income by 13% to 700 billion yen (approx. $6.7 billion). It be communicated as the firm announced a operating profit of about 317.8 billion yen (around $3.04 billion) for the three months down Sept. 30.
Jefferies Asia’s Atul Goyal told CNBC on Thursday that he’s “extremely bullish” on Sony. The decided owns the stock and currently has a “buy” rating on Sony, with a price target of 13,230 yen per share — more than 50% grand than where the price currently sits.
… this is one of the best companies that we have seen in our coverage.
Managing President, Jefferies Asia
Sony is set to release its next generation video game console, PlayStation (PS) 5, which would finish in the money b be on the back of the blockbuster success of PlayStation 4.
“It is looking very solid, very strong for PlayStation 5 and the whole cycle that invents ahead of us for the next 5 to 6 years,” Goyal, a managing director at Jefferies Asia, told CNBC’s “Squawk Box Asia” on Thursday. He highlighted Sony’s demands that the company received as many preorders in 12 hours for the PS5 as it did in 12 weeks for the PS4.
“You would hear shortages of PlayStation 5 because there’s more need than supply,” the analyst said.
It’s not due to supply disruptions as “they have been able to recover from the … supply-side paucities that they were facing early on because most of the assemblies are happening in China and most of the supply sequences have recovered almost entirely in China.”
“Demand is so strong for the product that that will keep the information flow that this product is sold out in most places for a while,” Goyal added.
The video trick sector has been among the few that have benefited from more people staying at home as a result of the coronavirus pandemic. That has express questions over the sustainability of that bounce in a post-pandemic environment.
“The increase of gaming that we have seen partly is because of cable home, not just working from home, but vacationing from home where people are not traveling, and even the weekends you prevention home,” Goyal pointed out. “This increase, part of that will be reverted as and when Covid goes away, and in my currish case it doesn’t go away entirely until the end of 2021.”
Still, he said some of these habits that have switched as a result of the pandemic “could last longer.”
“We’re not factoring in (the) next five, six years of Covid-driven earnings increase. What we are influence is Playstation 5-driven upside, driven by digital sales,” the analyst added.
Looking beyond Sony’s gaming point, which accounts for a sizable chunk of its operating income, Goyal said the firm’s music business is “also spectacular” while its mental picture sensing business is also set to recover.
“All in all, this is one of the best companies that we have seen in our coverage,” he said. “Functions in these three areas are all duopoly or oligopoly, and Sony’s a leader in all of them, with meaningful growth ahead.”