Japan Specialist

Mark Chadwick

Equity Bottom-Up

<ul>
<li>Tariff Headwinds: U.S. import tariffs could wipe out hardware margins, potentially costing Nintendo up to ¥95bn in FY3/26 gross profit.</li>
<li>Guidance Risk: With bullish consensus expecting ¥450bn in FY3/26 operating profit, upcoming guidance on July 5 may significantly disappoint.</li>
<li>Valuation Hinges on Recovery: FY3/27 earnings could rebound to ¥600bn if cycle normalises and tariff risks ease—implying a fair 13x EV/EBIT multiple.</li>
</ul>


Tariff Headwinds: U.S. import tariffs could wipe out hardware margins, potentially costing Nintendo up to ¥95bn in FY3/26 gross profit.
Guidance Risk: With bullish consensus expecting ¥450bn in FY3/26 operating profit, upcoming guidance on July 5 may significantly disappoint.
Valuation Hinges on Recovery: FY3/27 earnings could rebound to ¥600bn if cycle normalises and tariff risks ease—implying a fair 13x EV/EBIT multiple.


Nintendo (7974) | Next-Gen Switch 2 Meets Next-Level Margin Risk

<ul>
<li>Switch slowdown: Nintendo’s Q3 revenue and profit fell sharply as the ageing console nears the end of its cycle, missing hardware sales expectations.</li>
<li>Guidance cut: Full-year revenue and profit forecasts were lowered, but investors remain focused on the upcoming Switch 2 launch.</li>
<li>Muted upside: Switch 2 is an incremental upgrade, unlikely to expand the market significantly or boost Nintendo’s valuation beyond its current fair value of ¥9,000 per share.</li>
</ul>


Switch slowdown: Nintendo’s Q3 revenue and profit fell sharply as the ageing console nears the end of its cycle, missing hardware sales expectations.
Guidance cut: Full-year revenue and profit forecasts were lowered, but investors remain focused on the upcoming Switch 2 launch.
Muted upside: Switch 2 is an incremental upgrade, unlikely to expand the market significantly or boost Nintendo’s valuation beyond its current fair value of ¥9,000 per share.


Nintendo (7974)| Nintendo: Switch 2 Can’t Come Soon Enough

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

<ul>
<li>Our outlook remains bullish on MSCI ACWI. Discussed in latest Int’l Compass (1/9/2025) how viewed the pullback as buying opportunity and were watching for $116-$117 support to hold on ACWI-US.</li>
<li>$116 support held perfectly and we expect upside to continue following 1+ month bull flag breakouts, followed by successful retests of support, on ACWI-US and the S&amp;P 500.</li>
<li>We also upgraded Germany to overweight last week, with RS on the DAX breaking out from a 2-year base. U.S. (SPX) and Germany are our only two country overweights.</li>
</ul>


Our outlook remains bullish on MSCI ACWI. Discussed in latest Int’l Compass (1/9/2025) how viewed the pullback as buying opportunity and were watching for $116-$117 support to hold on ACWI-US.
$116 support held perfectly and we expect upside to continue following 1+ month bull flag breakouts, followed by successful retests of support, on ACWI-US and the S&amp;P 500.
We also upgraded Germany to overweight last week, with RS on the DAX breaking out from a 2-year base. U.S. (SPX) and Germany are our only two country overweights.


Remain Risk-On With Market Dynamics Improving; 6+ Month Base Breakouts for MSCI ACWI Ex-US and EAFE

<ul>
<li>Nintendo will release its Q2 financial results this Tuesday, and we forecast operating profit (OP) to come in at ¥54 billion</li>
<li>We expect Nintendo may revise its full year guidance downward to reflect softer demand for Switch hardware.</li>
<li>In the short term, however, a bearish stance may be prudent, especially if Q2 results disappoint and Nintendo refrains from disclosing a Switch 2 timeline</li>
</ul>


Nintendo will release its Q2 financial results this Tuesday, and we forecast operating profit (OP) to come in at ¥54 billion
We expect Nintendo may revise its full year guidance downward to reflect softer demand for Switch hardware.
In the short term, however, a bearish stance may be prudent, especially if Q2 results disappoint and Nintendo refrains from disclosing a Switch 2 timeline


Podcast by Dom Cooke to explore big businesses, Business Breakdowns

Business Breakdowns

Podcast by Dom Cooke to explore big businesses

Learn how companies work from the people who know them best. We do deep research and interview industry veterans, investment professionals, and corporate executives to explain the inner workings of public stocks and private businesses. For each company, we break down their history, business model, financial statements, secret sauce, and bull/bear case. We believe every business has lessons to teach us and Breakdowns is here to highlight them. Learn more and stay up to date at www.joincolossus.com.

<ul><li>Finley translates unstructured credit agreements into code to streamline credit management processes</li><li>Borrowers like RAMP and ANOVA rely on Finley for tracking and automation of reporting requirements</li><li>Lenders like Trinity Capital Valley bank use Finley as a command center for debt capital data and analysis across transactions.</li></ul><p><em>This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.</em></p>

Finley translates unstructured credit agreements into code to streamline credit management processesBorrowers like RAMP and ANOVA rely on Finley for tracking and automation of reporting requirementsLenders like Trinity Capital Valley bank use Finley as a command center for debt capital data and analysis across transactions.This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.

Gaming Consoles Part 3: Nintendo - [Business Breakdowns, EP.203]

Japan

Nintendo Co., Ltd. globally develops, manufactures and sells home-use video game hardware and software in home entertainment business.  The company also produces home-game products including cards.

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Nintendo (7974 JP)

Nintendo (7974) | Next-Gen Switch 2 Meets Next-Level Margin Risk

US import tariffs could greatly impact Nintendo's profits, with upcoming guidance potentially falling short of expectations. Recovery in FY3/27...

Mark Chadwick

Nintendo (7974)| Nintendo: Switch 2 Can’t Come Soon Enough

Nintendo's Q3 revenue and profit decline as aging Switch nears end of cycle, investors eye Switch 2 launch for potential growth.

Mark Chadwick

Remain Risk-On With Market Dynamics Improving; 6+ Month Base Breakouts for MSCI ACWI Ex-US and EAFE

Remain Risk-On With Market Dynamics Improving; 6+ Month Base Breakouts for MSCI $ACWI ex-US and $EAFE; U.S. Dollar $DXY and 10-Year Yields $TNX...

Vermilion Research

Nintendo (7974) | Q2 Earnings Preview

Nintendo's Q2 financial results expected to show ¥54 billion operating profit, but full year guidance may be revised down due to softer Switch...

Mark Chadwick

Gaming Consoles Part 3: Nintendo - [Business Breakdowns, EP.203]

Finley translates credit agreements into code for streamlined credit management, borrowers and lenders rely on Finley for tracking and automating...

Business Breakdowns

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Nintendo (7974) | Next-Gen Switch 2 Meets Next-Level Margin Risk

​US import tariffs could greatly impact Nintendo's profits, with upcoming guidance potentially falling short of expectations. Recovery in FY3/27...

Mark Chadwick

Nintendo (7974)| Nintendo: Switch 2 Can’t Come Soon Enough

​Nintendo's Q3 revenue and profit decline as aging Switch nears end of cycle, investors eye Switch 2 launch for potential growth.

Mark Chadwick

Remain Risk-On With Market Dynamics Improving; 6+ Month Base Breakouts for MSCI ACWI Ex-US and EAFE

Remain Risk-On With Market Dynamics Improving; 6+ Month Base Breakouts for MSCI $ACWI ex-US and $EAFE; U.S. Dollar $DXY and 10-Year Yields $TNX...

Vermilion Research

Nintendo (7974) | Q2 Earnings Preview

​Nintendo's Q2 financial results expected to show ¥54 billion operating profit, but full year guidance may be revised down due to softer Switch...

Mark Chadwick

Gaming Consoles Part 3: Nintendo - [Business Breakdowns, EP.203]

Finley translates credit agreements into code for streamlined credit management, borrowers and lenders rely on Finley for tracking and automating...

Business Breakdowns

US import tariffs could greatly impact Nintendo's profits, with upcoming guidance potentially falling short of expectations. Recovery in FY3/27...

Nintendo's Q3 revenue and profit decline as aging Switch nears end of cycle, investors eye Switch 2 launch for potential growth.

Nintendo's Q2 financial results expected to show ¥54 billion operating profit, but full year guidance may be revised down due to softer Switch...