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Sony's Game Business to 'Drive Earnings Growth' - BofA

Stock Markets Aug 24, 2022 11:34
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By Sam Boughedda

A BofA analyst reiterated a Buy rating and maintained a ¥14,000 price target on shares of Sony Group Corporation (NYSE:SONY) on Wednesday.

The analyst told investors in a note that their stance is based on the company's prospects for growth driven by its content and sensor businesses.

"With PS5 output set to ramp up, we expect the game business to drive earnings growth. Our near-term focus is 3Q earnings in the games business after the release of the latest titles in two major franchises: proprietary title God of War and third-party title Call of Duty. After recent declines, we believe the stock is at an especially attractive level, now trading at a P/B of 2x, near the bottom of the recent range," the analyst wrote.

BofA lifted its "FY3/24E OP by 6% to ¥1,350bn (IFIS consensus: ¥1,312bn), mainly after an upward revision to our sales assumption for game software from +10% YoY to +30% assuming the same uptrend as the fourth year out from PS4 launch."

Meanwhile, they see trends for previous PS consoles show sales tend to continue expanding into the fifth and sixth years.

"We estimate FY3/25 OP will rise 12% YoY to ¥1,507bn on the back of the PS5 console cycle. Focus on Sony's initiatives in live service games," added the analyst, who also said that the firm is positive on Sony's moves in live service games.

Sony's Game Business to 'Drive Earnings Growth' - BofA
 

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