Nintendo Switch Sales Are Expected to Fall

Jefferies’ Atul Goyal, also known as “Nintendo’s biggest bull on Wall Street,” just reduced his price target for the company by over 10 percent from 71,200 yen ($640.45) to 64,200 yen ($577.48). Why? Goyal claims that there are now lower expectations for Switch sales in 2018.

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“Market expectations for Switch, as reflected in stock price, have turned from robust growth to no-growth in a matter of three months,” Goyal said. “We believe continued sales of Switch over the course of this year and next could very well prove this current thesis of Switch being ex- growth wrong as well.”

“But given the sustained selling pressure, perhaps the short-term market is right about Nintendo (for a change) and perhaps it doesn’t grow in hardware sales,” he added.

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Nintendos stock is currently sitting at about 38,000 yen ($341.83), meaning it needs to jump by about 69 percent to hit Goyal’s lower target. Despite his downgrade in price target, he still says the stock has a strong “buy” rating.

“No other company in our coverage is experiencing such growth and trading at such low multiples,” Goyal said. “Nintendo Switch has only 1 year in the bag and 4-5 years more to go, with benefits from cycle and structural (digital) upside. Mobile, China, Online are some other potentially large drivers.”

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Nintendo Switch Sales Are Expected to Drop