Analysts at Macquarie Equity Research upgraded Sony Group (NYSE:SONY) from Neutral to Outperform, citing the successful Helldivers II game as “a potential game-changer” and limited downside after Q3.
While Macquarie maintains a cautious stance on the overly optimistic sell-side forecasts concerning the profit and margin projections for the gaming segment in the long run, they now see a short-term investment opportunity in SONY shares, driven by the market's underestimation of Helldivers II's impact.
This recently released co-op third-person shooter hit has dominated sales charts on both Steam/PC and PS5 for the quarter, the broker highlighted.
“In our view, the game has the potential not just to drive upside vs near-term profits vs guidance, it may also favourably shift the narrative around Sony's games business,” analysts wrote in a note.
To reflect the potential Helldivers II upside, analysts have increased their operating profit (OP) estimate for the fiscal year ending March 2024 by 2%.
They predict an operating profit of ¥1.13 trillion for the fiscal year ending March 2025, which includes an upward revision in their forecast for the Games segment.
“We estimate growth in Games segment OP to ¥310bn, helped by a dropping-out of restructuring costs, cost reduction due to the restructuring, and reduction in Bungie-related (amortisation etc.) costs,” analysts wrote.