Sony price target rises

More investors bullish on company’s future

According to Credit Suisse, Sony could beat their upcoming guidance as PlayStation continues to perform and their image sensor division picks up momentum.

We view Sony’s FY3/18 OP forecast as conservative. We think expectations for a full-FY3/18 guidance beat will increase each quarter. We expect strong momentum for the CIS (CMOS image sensors) business, driven by accelerated adoption of dual lens camera smartphones and higher-resolution frontfacing cameras. Sony is boosting production capacity to meet rising demand. We forecast profit growth for games as the PS4 approaches the peak of its life cycle, while the pictures, music and electronics-related segments are stable.

I wouldn’t argue with most of their reasoning listed above, though I’m not sure I’d label Sony Pictures as ‘stable,’ seeing how they just lost two major producers to Apple and their best performing movie last year was Resident Evil. According to Barrons:

The brokerage lifted its target price to JPY4,700 a share from JPY4,300 a share and said that expectations for a beat on the company’s 2018 guidance will grow. Credit Suisse maintained its outperform rating. Sony last traded at JPY4,138 a share. The new price target implies roughly 14% upside. The stock is up 26% this year.

The big trick for Sony will be to keep revenues for PlayStation higher as the console approaches its fourth year on the market and a lack of knee jerk reaction to Xbox One X with a price drop on PS4 Pro is a good sign that they understand this as well. With both PS4 Pro and PSVR seeing no price drop at E3 2017, it signals a shift in business strategy for PlayStation where with previous consoles, nearly each year was indication of a slight price drop which made growing revenue and profit harder once a console eclipsed its fourth year on the market.

With PS4 Pro and PSVR, Sony can now maintain a higher ASP while it’s able to grow its user base with the original PS4 (slim) which has seen a price drop. As for image sensors, the advent of IoT devices, autonomous vehicles, and rise of AR in smartphones signals a booming market segment that Sony can uniquely capitalize on.

Thanks for reading! If you liked this post, let me and others know by hitting the ♡ button below which also helps the site grow!