NTDOY - Nintendo dips as Citi hits sidelines awaiting console future news

Nintendo ( OTCPK:NTDOY ) is 3.2% lower in U.S. trading following a downgrade to Neutral at Citi, which is in wait-and-see mode on whether the videogame giant can take some steps to boost its addressable market.

"We had thought the correlation between software, the real source of profits, and hardware would diminish with the Switch and we had forecast that Nintendo would transition to its next-generation console while maintaining a modest profit uptrend," analyst Junko Yamamura said.

But as the Switch ages on, "we conclude the correlation remains deep-rooted," and the bank is now forecasting a fall in operating profit in fiscal 2023-24.

The COVID-19 pandemic spurred some operating environment changes for the videogame industry, Yamamura noted, with PCs spreading globally - and some software makers responding with strategies that don't bind them to one platform.

"Nintendo ( OTCPK:NTDOY ) has impressive content, and we think it can take various steps to expand [total addressable market] but it has not so far done anything that surprises us," Yamamura said.

That puts Citi on the sidelines with a lower target price of ¥5,600, cut from ¥7,100 (and now implying just 6% upside).

Wall Street overall considers Nintendo a Strong Buy , while Seeking Alpha authors think of it as a Buy . Seeking Alpha's Quant Ratings call Nintendo stock a Hold .

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