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The Zacks Analyst Blog Highlights: Sony, Nintendo, Microsoft and Electronic Arts

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·5 min read
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For Immediate Release

Chicago, IL – October 15, 2021 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Sony Group Corporation SONY, Nintendo Co., Ltd. NTDOY, Microsoft Corporation MSFT and Electronic Arts, Inc. EA.

Here are highlights from Thursday’s Analyst Blog:

3 Stocks to Watch in a Promising Videogame Industry

The pandemic saw some industries unexpectedly benefiting, with videogames leading the race. The gaming market was already doing great and the pandemic gave it a further push.

Unlike many had predicted, the gaming market has not slowed down with economic reopening. In fact, spending on videogames is soaring this year too.

Videogame Spending

The pandemic saw the number of gamers jumping 73% to 79% in 2020, according to NPD's 2021 Evolution of Entertainment report. Obviously, with no other source of entertainment left, gaming was one of the few options. However, the number of gamers has declined to 76% this year. 

Despite this decline, spending on videogames has jumped this year. According to the report, spending on videogames in the United States jumped 35% in the first six months of 2021 on a year-over-year basis.

Also, time spent on playing games too has jumped since the pandemic hit. This year, an average game has spent 16.5 hours weekly on playing games, up from 14.8 hours a week in 2020 and 12.7 hours a week in 2019. This shows the underlying strength in the videogame industry.

Industry Poised to Grow

The videogame market holds immense potential for growth. Following the COVID-19 outbreak, the industry has been on a joyride, with sales rising every month, except for a surprise decline in April.

Also, the market leaders released some attractive titles last year and this year alongside the launch of new consoles.

According to another report by the NPD Group, gamers spent $4.37 billion on videogames and accessories in August, jumping 7% on a year-over-year basis. Sony’s PlayStation 5 was the best-selling in terms of dollar sales. However, Nintendo’s Switch was the top-selling console in August.

According to NPD Group’s Q2 2021 Games Market Dynamics: U.S., spending on videogames in the second quarter of 2021 rose 2% year over year to reach $14 billion. It is expected that the third quarter too will be good given that sales have jumped in all the months so far.

Stocks to watch

The videogame industry was one of the few and biggest beneficiaries of the pandemic and has been on a high ever since. This thus makes it an opportune time to invest in gaming stocks that are sure to benefit in the near term.

Sony designs, manufactures and sells several consumer and industrial electronic equipment. The company’s product roster comprises audio and video equipment, televisions, displays, semiconductors, electronic components, gaming consoles, computers and computer peripherals, and telecommunication equipment. 

The company’s expected earnings growth rate for next year is 17.3%. The Zacks Consensus Estimate for current-year earnings has improved 2.4% over the past 60 days. Sony has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Microsoft is one of the leading videogame makers and manufacturers of hardware and accessories. The company has been expanding its footprint in the industry and recently announced that it will be acquiring videogame maker ZeniMax Media.

The company’s expected earnings growth rate for the current year is 8.4%. The company’s shares have gained 6.8% in the past three months. Microsoft carries a Zacks Rank #2.

Electronic Arts is a leading developer, marketer, publisher and distributor of interactive games (video game software and content). It distributes gaming content and services through multiple distribution channels as well as directly to consumers (online and wirelessly) through its online portals.

The company’s expected earnings growth rate for the current year is 15.8%. The Zacks Consensus Estimate for current-year earnings has improved 0.5% over the past 60 days. Electronic Arts has a Zacks Rank #2.

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.


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