Trump meets Zelenskiy, says Putin wants war to end, mulls trilateral talks
On Monday, Bernstein maintained an Outperform rating on Sony Corp. (TYO:6758:JP) (NYSE: SONY) and increased its price target from JPY3,900 to JPY4,600. The revision follows Sony (NYSE:SONY)’s impressive performance in the third quarter, driven by robust sales of Playstation products. Analysts at Bernstein highlighted that the console’s success has led to earnings that exceeded expectations, prompting a reassessment of the company’s financial outlook. The stock has demonstrated strong momentum, trading near its 52-week high of $25.29 with a remarkable 41.28% return over the past year. According to InvestingPro analysis, Sony maintains a GOOD financial health score, supported by 13 additional key insights available to subscribers.
The analysis by Bernstein suggests that the market may be underestimating Sony’s potential for software revenue growth by the fiscal year ending March 2026. The anticipation of major first-party titles, including the highly awaited Grand Theft Auto VI slated for release in Fall 2025, is expected to contribute significantly to Sony’s revenue. The company’s effective cost management strategies are also projected to pave the way for an operating profit surpassing JPY500 billion. With a current P/E ratio of 20.36 and revenue growth of 9.75% over the last twelve months, Sony has demonstrated strong fundamental performance.
Bernstein predicts that Sony’s operating income, excluding financial segments, will witness a compound annual growth rate (CAGR) of 17%, which is 8% higher than the consensus estimates. This growth is attributed to substantial margin expansion across multiple segments, with margins increasing from 9.2% to an estimated 12.7%. Consequently, earnings per share (EPS) are forecasted to grow at a 16% CAGR over the next three years, outpacing the expected revenue growth of 5% CAGR.
The revised price target of JPY4,600 is based on a forward price-to-earnings (P/E) ratio of 21 times, which is an increase from the previously used 18.5 times. Bernstein’s reiteration of the Outperform rating reflects confidence in Sony’s capacity to continue its growth trajectory and outperform market expectations.
In other recent news, Sony Corp. reported financial results that exceeded expectations, particularly in its Games division, which contributed significantly to the company’s operating profit. Macquarie responded by raising its price target for Sony to JPY4,050, citing robust third-party revenue in the gaming sector. Meanwhile, Bernstein maintained an Outperform rating with a JPY3,900 price target, emphasizing the PlayStation 5’s strong market position and anticipated earnings growth driven by new game releases. In contrast, Citi held a Neutral stance with a JPY2,800 target, following Sony’s announcement of a management restructuring that will see Hiroki Totoki become CEO.
Macquarie noted that despite potential setbacks from Electronic Arts (NASDAQ:EA)’ recent guidance cut, Sony’s gaming division remains on a positive trajectory. The firm expects Sony’s Game & Network Services operating profit to grow significantly by March 2026. Morgan Stanley (NYSE:MS) also expressed optimism, raising its price target to JPY4,000 due to Sony’s successful engagement strategies in the PlayStation business. They anticipate that the PlayStation platform’s value will be further recognized in 2025, driving earnings growth.
These developments reflect a continued strong performance in Sony’s gaming sector, with analysts generally maintaining a positive outlook on the company’s financial health and future growth prospects.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.