Sony (6758 JP): Weighing the Bull and Bear Case
Executive summary
Sony is in the early stage of the PlayStation 5 console cycle. The gaming console is likely to become a major success. In addition, several other growth drivers such as demand for camera image sensors and content for music and video streaming services are also positive for Sony’s near- to medium-term outlook.
The longer-term outlook for Sony’s music label and Hollywood studio can be questioned as streaming platforms disintermediate the two industries. You can also question some of Sony’s recent acquisitions, including its foray into the Japanese insurance market.
Nevertheless, the outlook for Sony’s earnings is excellent and I see an upside of +23% to a target price of JPY 13,920/share, assuming a 2024 EV/EBIT multiple of 15x.
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