This is equal to downgrading Jesus after he rose from the dead and stunted on his killers.
The Germans believe $19 billion tacked onto the market cap of Nintendo is a bit too much. Moreover, they’d like investors to exhibit a bit of discipline when buying into a company that generally sucks, save the new app.
“Pokémon Go is a genuine phenomenon ? just after little over a week, it has added US$19 billion to the value of Nintendo,” writes Deutsche Bank analyst Han Joon Kim. “The market is now valuing Nintendo at US$27 billion in market capitalization (ex-cash & treasury shares at book value), on a par with global leaders such as Electronic Arts Inc. and Activision Blizzard Inc. that respectively have 5 percent global video game market share versus Nintendo’s current 2 percent.”
As such, amid this frenzy, the stock price now reflects operating and financial performance that will be difficult to realize, he argued.
“We need to see further hard evidence to model in significant further upside,” writes Kim, adding that the launch of Pokémon Go in other regions, introduction of new mobile games, and the reception to its new NX console were key events to watch in this regard.
The analyst cut his rating on Nintendo to “hold” from “buy” and upped his price target to 30,000 yen from 23,600 yen.
“We think the stock price now prices in a large portion of the market share recovery story, which we believe is readily achievable from leveraging its intellectual property to some degree,” he explains. “Combined with mobile game launches and market share recovery in console via NX, we are willing to model in a market share recovery by FY3/2019 to ~5 percent, but not towards the 10 percent level that Nintendo enjoyed in 2009 when Wii revolutionized the game industry.”
Shares of Nintendo, who own 33% of Pokemon, are up 91% over the past few weeks–due to the millions of freshly minted pokemon trainers now traversing the earth in search of augmented reality treasures.
If you enjoy the content at iBankCoin, please follow us on Twitter
