Trim Nintendo FVE to JPY 51,000, but Share Price Decline Over-Reaction to Short-Term Disappointment

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Nintendo's Revised Guidance Is Above Our Expectations, and We Still Expect a Room to Go Up

Raising Nintendo's FVE to JPY 50,000 as the Switch Will Replicate the Success of the Wii

Unique User Experience and Third-Party Games Drive Switch’s Second Year; Raise FVE to JPY 56,000

Leading Independent Investment Research, Morningstar, Inc.

Morningstar

Leading Independent Investment Research

Morningstar, Inc.

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Equity Bottom-Up

<p>Although Nintendo’s new operating income guidance of JPY 225 billion for fiscal 2019 is below our forecast of JPY 325 billion, the guidance is conservative as usual. We believe that unique user experience such as Nintendo Labo will help cultivate new fans, and a greater number of third-party games will attract more core gamers to its ecosystem. As a result, we believe that the hardware shipment will accelerate this year and exceed Nintendo’s forecast. Moreover, we view that software shipment is…</p>

Although Nintendo’s new operating income guidance of JPY 225 billion for fiscal 2019 is below our forecast of JPY 325 billion, the guidance is conservative as usual. We believe that unique user experience such as Nintendo Labo will help cultivate new fans, and a greater number of third-party games will attract more core gamers to its ecosystem. As a result, we believe that the hardware shipment will accelerate this year and exceed Nintendo’s forecast. Moreover, we view that software shipment is…

Nintendo’s Guidance on Switch Shipment Looks Conservative; Shares Undervalued