NTDOY - As The Switch Peaks Nintendo Needs To Build The Next Growth Engine
- Nintendo surpassed fiscal Q3 expectations by a healthy margin at both the revenue and operating earnings lines, with double-digit sales growth in hardware and software.
- Switch sales haven't peaked, but momentum is likely to slow from here, and management is not willing to start talking about a new console.
- With Switch reaching its peak and Microsoft and Sony ramping up new console editions, Nintendo risks a meaningful contraction in revenue and earnings in the coming years.
- Nintendo shares do look modestly undervalued, but I want a wider margin of safety before investing ahead of what could be a multiyear decline in profits.
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As The Switch Peaks, Nintendo Needs To Build The Next Growth Engine