Wall Street's biggest Nintendo bull shrugs off the stock's recent plunge, pounds the table to buy
- Nintendo has slumped 10% over the last two trading sessions.
- The selling has pushed shares below their 200-day moving average and to their lowest level in nine months.
- Jefferies analyst Atul Goyal says not to worry, the fundamentals are looking good.
- Watch Nintendo trade in real time here.
Nintendo shares are reeling after two days of heavy selling pushed them back below a key technical level and to their lowest point in nine months. But Jefferies analyst Atul Goyal, who is the biggest Nintendo bull on Wall Street, says not to worry, the fundamentals are looking good.
Last week, Nintendo shares fell below their 200-day moving average for the first time since July 2016 - when they more than doubled in less than two week's time following the release of Pokemon Go.
After briefly reclaiming the key technical level, shares have slumped 10% over the last two trading sessions, pushing them back below the mark.
"Some investors see this break as "price action telling you to sell," Goyal wrote in a note to clients sent out on Monday. "We do note that recently Facebook, Alibaba and many other stocks broke below 200DMA and are above that. And others broke below 200DMA and didn't recover."
But Goyal says not to worry, the recent weakness has left Goyal a bit puzzled as shares have been sliding despite a plethora of good news coming from the company.
"Of-late, Nintendo announced launch of Pokemon games on Switch (not 1 but 4 different games between now and 2019)," Goyal said. There is more to look forward to - for E3, where Switch may get support from other third-parties including Epic Games' Fortnite. All this strengthens our belief that Switch as a platform is getting stronger (and not weaker).
In April, Nintendo posted strong third-quarter results, which caused Goyal to proclaim that it was the "cheapest game stock in the world."
"As fundamental analysts, we look at business, competition, supply-chain, earnings, cash-flows, dividends, valuations - which are getting stronger, and we'd say BUY," Goyal wrote. "And we do reiterate BUY."
Goyal has a price target of ¥79,900, 97% above its current level. By comparison, Wall Street's average target for Nintendo is just ¥58,944.
Nintendo is down 1.75% this year.