Bernstein SocGen Group maintained its Market Perform rating on BANDAI NAMCO Holdings Inc (7832:JP) (OTC: NCBDY), with a steady price target of JPY3,250.00. BANDAI NAMCO, known for its video games and toys, has been observed to have a gaming pipeline filled with minor launches and remakes, and its project 'Unknown 9' continues to be missing in action. This comes at a time when the company's Toy & Hobby segment has not shown growth when revenues are measured in USD.
The company's current video game offerings, which are limited in scope, could inadvertently benefit near-term earnings due to the lower costs associated with the development and marketing of smaller titles.
This contrasts with the more significant financial commitment generally required for larger, blockbuster game launches. The analyst noted the lack of major new releases, suggesting this could have a positive effect on the company's immediate financial results.
Concerns were raised regarding the engagement levels for 'Final Fantasy XIV,' which have recently seen a decline. This dip in one of the company's key franchises is highlighted as an area that warrants attention. The analyst pointed out that while the short-term earnings might benefit from the current situation, the engagement issues with a major title like 'Final Fantasy XIV' could be indicative of underlying challenges.
Looking ahead, the longer-term outlook for BANDAI NAMCO's game pipeline remains uncertain. The analyst underscored the importance of future game releases and their potential impact on the company's sustained growth and market performance.
This uncertainty in the company's future offerings poses questions about the long-term direction of its gaming division.
The upcoming remake of Square Enix's 'Dragon Quest III' is noted to be highly anticipated and is expected to incur a relatively modest research and development amortization burden. This suggests that some industry peers may have more impactful launches on the horizon, which could influence competitive dynamics.
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