Nintendo Co., Ltd. (TSE:7974) Analysts Are Pretty Bullish On The Stock After Recent Results

Shareholders might have noticed that Nintendo Co., Ltd. (TSE:7974) filed its annual result this time last week. The early response was not positive, with shares down 4.4% to JP¥11,820 in the past week. It was a credible result overall, with revenues of JP¥1.2t and statutory earnings per share of JP¥239 both in line with analyst estimates, showing that Nintendo is executing in line with expectations. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

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After the latest results, the 25 analysts covering Nintendo are now predicting revenues of JP¥2.04t in 2026. If met, this would reflect a huge 75% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to bounce 30% to JP¥312. Before this earnings report, the analysts had been forecasting revenues of JP¥1.96t and earnings per share (EPS) of JP¥321 in 2026. Overall it looks as though the analysts were a bit mixed on the latest results. Although there was a a huge to revenue, the consensus also made a minor downgrade to its earnings per share forecasts.

See our latest analysis for Nintendo

Curiously, the consensus price target rose 7.2% to JP¥11,859. We can only conclude that the forecast revenue growth is expected to offset the impact of the expected fall in earnings. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Nintendo, with the most bullish analyst valuing it at JP¥15,580 and the most bearish at JP¥7,800 per share. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. One thing stands out from these estimates, which is that Nintendo is forecast to grow faster in the future than it has in the past, with revenues expected to display 75% annualised growth until the end of 2026. If achieved, this would be a much better result than the 2.4% annual decline over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 11% annually. So it looks like Nintendo is expected to grow faster than its competitors, at least for a while.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Nintendo. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Nintendo going out to 2028, and you can see them free on our platform here.

It is also worth noting that we have found 2 warning signs for Nintendo (1 is a bit concerning!) that you need to take into consideration.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.