Wedbush recommends buying Nintendo stock amid record Switch 2 sales

Analyst Wedbush reiterated a "buy" recommendation on shares of Japanese video game maker Nintendo amid a record launch of sales of the Switch 2 video game console. Since the beginning of the year, Nintendo's securities have grown by almost 50%, but most Wall Street analysts still advise to buy them, predicting growth of 80%.

Wedbush analyst Alicia Reese reiterated a "buy" recommendation on Nintendo shares and maintained a target price of 14,000 yen (roughly $94.2), writes Barron's. Its benchmark suggests upside potential of about 9% above current levels. 

According to Reese, a positive factor for the company's stock was the recently released Switch 2 gaming console, which is projected to surpass sales of the first Switch in the coming years. The success of Nintendo Switch 2 will, in turn, drive software sales by increasing the installed base of the consoles, Reese added.

"We expect Nintendo's first quarter results (ending June 30) to significantly exceed our initial revenue guidance due to positive Switch 2 sales data worldwide," she wrote.

Nintendo's American Depositary Receipts (ADRs) rose 0.9% in New York trading on Tuesday. The company's securities have added 47% since the beginning of the year. Most analysts - 16 out of 26 covering Nintendo - advise them to buy (Buy and Overweight ratings) and only two recommend investors to sell the securities (Underweight and Sell). The Wall Street consensus price target of $35 implies an 80% increase in the company's market value.

Nintendo will release its quarterly earnings results on Friday, August 1st. Analysts forecast that Nintendo will report earnings of about $0.07 per share and revenue of about 448 billion yen (roughly $3 billion) for the quarter, writes MarketBeat. 

The company's forecast published in May for the fiscal year ending March 2026 predicts a net profit of 300 billion yen, or roughly $1.84 earnings per share.

Switch 2 sales began on June 5. The Japanese video game publisher later reported that Nintendo Switch 2 sold more than 3.5 million consoles worldwide in the first four days. This made it Nintendo's fastest-selling console at launch. 

Nintendo released its previous quarterly report on May 8. The company reported $0.06 earnings per share (EPS) for the quarter, meeting analysts' estimates. The company had a net margin of 23.81% and a return on equity of 10.51%. Revenue for the quarter came in at 215.06 billion yen (about $1.46 billion), which was in line with market expectations. 

At the same time, despite the hype surrounding the new Switch 2 console and record pre-orders, Nintendo published an extremely cautious outlook for the fiscal year. The company's expected sales and profits came in below market estimates.

For the fiscal year ending March 2026, Nintendo expects Switch 2 sales of 15 million consoles, versus analysts' average estimate of 16.8 million units. The company expects operating profit at 320 billion yen ($2.2 billion), also well below consensus. 

On average, analysts predict that Nintendo's earnings per share will be close to zero for the current fiscal year, rising to about $1 per share next year, MarketBeat writes.

Nintendo said its earnings forecasts are based on the assumption that U.S. tariff rates as of April 10 will remain unchanged throughout the fiscal year, пишет The Wall Street Journal.

This article was AI-translated and verified by a human editor