Nintendo has the cheapest game stock at the moment after Nintendo forecasted operating profit to fall under market estimates over the course of the next fiscal year. The announcement had a lot of the investors pulling out and the stock price is lowering as a result.
Nintendo Life is reporting that despite having a 500% increase in profits in the last fiscal year, Nintendo's forecasts for 2019 are only expected to increase by 26.7% compared to what the company accomplished in the previous year.
The article notes that Nintendo's own lowered forecasts would push the company's operating profit off by ¥83.7 billion. This forecast caused a decline in Nintendo's stock price, and that that opened up Nintendo for a lot of buy options among potential eager investors looking to buy low and sell high.
According to Atul Goyal, an analyst from Jefferies, he believes that not only will Nintendo's stock price eventually jump up above the company's own forecasts, but over the course of the next 12 months, it will also surpass the analyst estimates as well. Why is that? Because Goyal believes that the Switch's rapid-fire success coupled with an aggressive digital distribution strategy by Nintendo, along with the continued bolstering of Nintendo's mobile software line, would push the company right over the top and beat all expectations throughout 2019.
It's not hard to see why Goyal would think that when Nintendo Life points out that there was a 62% year-over-year increase in Nintendo's revenue from mobile software, including both sales and in-app purchases, and that Nintendo has plans on releasing additional iOS and Android apps throughout 2018. One of those games is a brand new IP made in collaboration with Cygames, famous for Granblue Fantasy and Shadowverse, two games that have become huge money makers in the mobile space.
None of that is to mention that Nintendo hasn't even revealed its entire E3 line-up yet, which will set the stage for the company's fall offerings, as well as a brief look at what the company will have in store for 2019.
Additionally, Nintendo has a few other first-party games on the horizon, such as Mario Tennis Aces and the highly anticipated Super Smash Bros, both of which are expected to move big units for the Switch throughout the year. And then there are the second party games, such as Shin Megami Tensei, which is coming out in collaboration with Atlus. And then there are various other high-profile third-party games such as Dark Souls, Mega Man X, and BlazBlue.
Goyal explained that if the momentum of the Nintendo Switch stays intact and Nintendo continues to output high-quality, system-selling games, then the company having the cheapest game stock on the market right now won't stay that way for long.