On Wednesday, Morgan Stanley (NYSE:MS) analysts increased the price target for Sony Corp. (TYO:6758:JP) (NYSE: SONY) shares to JPY4,000 from the previous JPY3,400, while sustaining an Overweight rating on the stock. The adjustment comes in light of Sony (NYSE:SONY)'s strong performance in the Games & Network Services (G&NS) sector as of September 2024.
The analysts highlighted several key factors behind the robust earnings of Sony's G&NS division. These include the evolution of the PlayStation business model, the successful engagement of users through effective utilization of data from network services, and the establishment of PlayStation as a premier publishing platform for both existing and new publishers.
According to Morgan Stanley's analysis, the positive developments within Sony's PlayStation segment are not only sustainable but are also expected to lead to a broader recognition of the PlayStation platform's value in 2025. The firm anticipates that the ongoing efforts will likely result in an upward trend for Sony's earnings, particularly in the G&NS segment, as well as a potential increase in valuation multiples.
The analysts at Morgan Stanley expressed confidence in the future prospects of Sony, suggesting that risks are more likely to favor further gains. They believe that the company's strategic initiatives around the PlayStation are poised to contribute significantly to its financial growth and market valuation.
In other recent news, Sony Corporation's earnings and revenue results have shown notable developments. The company reported a 6% increase in net profit and a 2% rise in revenue for the first quarter of fiscal year 2025. Despite a 22% decline in PlayStation 5 sales, Sony's adjusted EBITDA grew by 42% year-over-year, bolstered by stronger than expected sales of third-party games.
In the realm of mergers and acquisitions, Sony Music is reportedly close to finalizing a deal estimated at $500 million for the rights to Pink Floyd's recorded music. However, Sony is currently involved in a legal dispute due to its partnership with Pocketpair in a new joint venture, with Nintendo and The Pokemon Company filing a lawsuit against Pocketpair Inc.
Analysts have recently adjusted their outlook on Sony's stock. Morgan Stanley maintained an Overweight rating on Sony, with a bullish consensus of 1.29. However, the firm, along with Oppenheimer and TD (TSX:TD) Cowen, has adjusted Sony's stock price target due to factors like a 5-for-1 stock split and changes in the USD/JPY exchange rate. Despite this, both firms maintain a Buy rating for Sony. Meanwhile, CFRA upgraded Sony shares from Hold to Buy, increasing the stock price target to $102.
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