Editor’s Note: This analysis was originally published as a stock note by Morningstar Equity Research.
Key Morningstar Metrics for Nintendo
Fair Value Estimate: JPY 12,000Morningstar Rating: ★★★Morningstar Economic Moat Rating: WideMorningstar Uncertainty Rating: Medium
Nintendo Stock Update
Why it matters: Nintendo 7974 sold more than 20% of its 15 million console shipments target for fiscal 2025 (ending March 2026) within just four days. This reinforces our view that the company’s guidance is too conservative.
Compared with the 2.7 million Switch consoles that Nintendo shipped the month after its launch, and the estimated 2.5 million PlayStation 5 consoles that Sony shipped in the first few days after its launch, the Switch 2 has had the fastest initial sales in gaming history. We had expected Switch 2’s initial sales to surpass those of past consoles. Nintendo has amassed over 120 million Switch users, and appealing launch titles and a robust pipeline will encourage existing users to upgrade to the new model immediately.
The bottom line: For now, we maintain our fair value estimate for Nintendo of JPY 12,000. Although initial Switch 2 console sales exceeded our expectations, it is not surprising that enthusiastic users migrated from the Switch to the Switch 2 immediately after its release.
We maintain our forecast of 17 million Switch 2 console shipments for fiscal 2025, mainly due to uncertainty regarding tariffs. If the Trump administration imposes higher tariff rates, Nintendo may be forced to raise console prices in the US, which could result in a slowdown in shipments. The US accounts for approximately 35%-40% of console shipments, and the consoles intended for sale in the US are to be manufactured in Vietnam.
The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.
