Expectations For Nintendo's Switch Hybrid Console 'Still Low'

JPMorgan said in a note on Friday that it believes expectations for Nintendo Co., Ltd (ADR) NTDOY's Switch hybrid console is still low.

Switch: Key To Medium-Term Potential

Analyst Haruka Mori said she believes Switch is key to the company's medium-term potential. The analyst noted that the company will announce details of the Switch on January 13. Delving on the product, the analyst said neither the pricing nor the title lineup will disappoint and that the key to the Switch's medium-term potential is the new user experience. Details on user experience will also unveiled in January, the analyst said.

New User Experience Is The Appeal

JPMorgan believes the company's follow up with hands-on promotional events will allow Switch's potential to start being reflected in the stock price ahead of the launch. The firm also thinks Switch will have Nintendo's characteristic family appeal, given its emphasis on anytime/anywhere multi-player gaming.

The firm sees the new user experience as the key to lure young and hard core gamers carrying multiple devices to take on one ore product. According to the firm, there is likely to be close links between the Switch and Nintendo's upcoming smartphone games, which launch from December, beginning with Super Mario Run.

Revising Forecast, Raising Price Target

Based on contact following the second quarter results and updated product information, the firm revised its forecasts for Nintendo.

JPMorgan believes the shares of Nintendo are highly attractive, as market expectations for the upcoming Nintendo Switch hardware product, scheduled to be launched in March 2017, remain muted. The firm raised its price target for Nintendo shares to 30,000 yen from 28,000 yen, based on its revised forecasts and valuation assumptions. The firm remains at Overweight on the shares.

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