Nintendo: Q1 Earnings Reinforce The Switch 2 Bull Case

Nintendo: Q1 Earnings Reinforce The Switch 2 Bull Case

Nintendo’s Q1 sales fell 9.5%, but operating profit surged 150.5% as software, digital sales, tariff refunds, and favorable currency movements boosted profitability. Nintendo’s digital sales jumped 90%, while first-party software represented 82.6% of software sales, strengthening the thesis that ecosystem monetization is becoming increasingly important. Nintendo’s upcoming Pokémon, Zelda, Star Fox, Call of Duty, and other releases provide multiple catalysts for continued Switch 2 adoption and software spending. Nintendo trades at a premium to most gaming peers, but improving software economics and expected EBITDA growth support a 20x forward EV-to-EBITDA target. My $14.16 Nintendo price target implies roughly 11% upside, supporting a buy rating despite the narrower margin of safety following the post-earnings rally.

Investment Thesis I assign Nintendo Co., Ltd. ( NTDOY ) ( NTDOF ) ( NTDO:CA ) a buy rating due to the company's latest Q1 earnings strengthening my previous thesis that the Switch