After two years of flat earnings, Sony should revert to double digit growth. However, the video game business is at an inflection point in terms of profitability. This report looks at just how much the PS5 cycle might be able to drive profitability through FY26.
The global video games market has improved since the start of the year and 2023 now looks like being an "up" year, after the retrenchment in 2022. However, recent quarterly results suggested Japanese video games companies are struggling to take advantage of this. We look at why conditions are improving, and which Japanese firms are keeping pace and which aren't.
With global console game sales rising, analyst Pelham Smithers discusses whether we are in a new video game industry upswing. Moreover, sales of the PS5 are starting to generate clear water between those of the Xbox X/S in the Americas region – Microsoft’s backyard – so, if the gap becomes even more significant, there will certainly be implications for the X/S.
It has been a mixed earning season for Japanese automakers, although most are predicting strong profit growth for FY23. Despite the positive outlook, the market’s reaction has been lukewarm, due to concerns over overoptimism for sales growth and rapidly rising expenses. Analyst Julie Boote explores what the most important share price drivers could be for the seven listed automakers for FY23.
After an exceptionally good FY22, Pelham Smithers looks at the challenges ahead for Sony. He takes us through the performance and outlook for each division, highlighting areas of opportunity and potential risks, and lays out why he thinks earnings will resume double digit growth from FY24.
At the beginning of every year we publish our PSA Perspective, a report intended as a long shelf-life look at the year ahead. This year Pelham Smithers discusses Japan's economy, the outlook for the stock market, and some stand-out themes and developments for the year. These include the digital yen and the demise of live action entertainment in Japan. We also update our noted PSA Focus List of stocks. Table of Contents Overview 3 Background: 4 Japan’s Economic Outlook 5 Ja...
Sony’s 2Q FY22 beat all forecasts in Bloomberg’s coverage, partly a result of the weak yen and partly due to better-than-expected performances from the Media & Entertainment divisions. Nevertheless, there were reasons to be concerned, mainly, but not entirely, on the gaming front. While these results strengthen the firm’s near-term outlook, they do suggest that the medium-term outlook has less upside than we once had hoped.
The video games industry has enjoyed multi-year success, with mere temporary downturns in 2012 Ans 2019. Now, after 30 successful years, Pelham Smithers sees storm clouds gathering. A prolonged downturn is possible, and would come as a real shock, he thinks.
Predicting Sony’s earnings is more of an art than a science. Overall, we think Sony should see a slight fall in profits in FY22, though the fall would likely have been substantial had it not been for the yen. In this report, and ahead of the 10 May results, Pelham Smithers discusses the macro considerations, his concerns on key revenue sources and the questionable deal with Honda.
The Japanese stock market is in an interesting phase where the Bank of Japan is supporting the bond market rather than the stock market. While this phase lasts, the dollar should remain above ¥120/$ and perhaps strengthen further against the yen. This report looks at what this phase might mean for the Japanese stock market as a whole, and for stock selection. The PSA Focus List has also been updated.
2021 saw the video game industry delivery unlikely hits, several using new concepts such as NFTs and metaverse tropes. Meanwhile, the latest versions of Call of Duty, Battlefield and eFootball (Pro Evolution Soccer) looked dated and underwhelmed the public. The PS5 kicks off a new era for console gaming but the timing of its release also coincides with a new era for the broader industry. This report discusses those changes and which companies look best placed to benefit.
The independent financial analyst theScreener just lowered the general evaluation of SONY GROUP (JP), active in the Consumer Electronics industry. As regards its fundamental valuation, the title now shows 0 out of 4 stars while market behaviour can be considered moderately risky. theScreener believes that the title remains under pressure due to the loss of a star(s) and downgrades its general evaluation to Slightly Negative. As of the analysis date February 18, 2022, the closing price was JPY 12...
With the release of its Q3 results, Sony has revised up its FY21 OP target for a third time. As well as taking us through the Q3 performance and earnings outlook, Pelham Smithers discusses the firm’s recent deals and shines a light on trends in streaming on the fortunes of the music industry.
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