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Sony’s Strategic Investments to Cost $18B in 3 Years

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Sony Group (SONY) plans to pump more money into its businesses in the next three years in order to drive growth. The Japanese multinational operates a diverse business portfolio, including manufacturing of electronics for professionals and consumers, film production, and videogames publishing.

The company plans to spend 2 trillion yen ($18 billion) on strategic investments in the three years from Fiscal 2021 through Fiscal 2023. The investments will span across content, technology, and share repurchases.

When it comes to content, for example, the company wants to increase the collaboration between its entertainment units such as movies, games, and music. Specifically, Sony wants to ensure that it maximizes the value of an IP by capitalizing on it throughout its creative units. Also, the company will work to increase its services for independent artists, and it counts on the recently completed AWAL acquisition to assist with that goal.

The company's planned technology investment will seek to provide creators with better tools to produce their creative work. Simultaneously, the company will seek to offer customers better technology to consume its content.

A major object of the planned strategic investments is to increase the number of people who use Sony products, from the current 160 million to 1 billion. (See Sony stock analysis on TipRanks)

“Through investments in IP, group collaboration within Sony, and investment in social and mobile, we are excited for the opportunity to continue to expand our community,” said Sony Interactive Entertainment CEO Jim Ryan.

Oppenheimer analyst Martin Yang reiterated a Buy rating on Sony stock and assigned it a $135 price target, which implies 37.26% upside potential.

“We expect Sony’s video game and music business to drive strong shareholder returns in the long term,” noted Yang.

Consensus among analysts on Wall Street is a Moderate Buy based on 2 Buy and 1 Hold ratings. The average analyst price target of $120.40 suggests 22.42% upside potential to the current price.

SONY scores a “Perfect 10” from TipRanks’ Smart Score rating system, implying the stock is likely to outperform the market.

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