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SONY Rises 30.1% in the Past Year: Will the Uptrend Continue?
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Sony Group Corporation (SONY - Free Report) is witnessing healthy momentum this year so far. Shares of the company have gained 30.1% in the past year compared with the sub-industry’s and S&P composite’s growth of 27.1% and 20.5%, respectively. Year to date, the stock has risen 9.5% compared with the sub-industry’s growth of 7.6%.
The increase in share price is driven by continued strength in the Game & Network Services segment (G&NS), its largest business segment, as well as in the Music segment.
In the last reported quarter, revenues from the GN&S segment were up 28% year over year to ¥771.9 billion. It sold 3.3 million units of Play Station 5. It continues to expect selling more than 25 million units of PlayStation 5 in the current year.
Image Source: Zacks Investment Research
SONY is also investing in research and development to capitalize on the lucrative opportunity presented by live services games and the sale of add-ons for titles. The company forecasts the market for add-on style games to become a $19 billion opportunity by 2026.
In August 2023, SONY acquired Audeze LLC to continue improving the audio experience of its PlayStation games. Apart from this, frequent product launches and strategic collaborations bode well. In June, the company announced its partnership with SQUARE ENIX for its latest game — FINAL FANTASY XVI.
The Music business segment is likely to benefit from higher recorded music and music publishing sales from paid subscription streaming services.
Driven by strengthening momentum in the GN&S and Music segments’ sales,Sony has revised its outlook for the fiscal year ending Mar 31, 2024. It now anticipates sales of ¥12,200 billion compared with the earlier guidance of ¥11,500 billion. Net income is now estimated to be ¥860 billion compared with the prior guidance of ¥840 billion. Operating income is projected to be ¥1,170 billion. Operating cash flow is expected to be ¥1,250 billion.
Weakness in the Pictures, and Imaging & Sensing Solutions (I&SS) segments is a concern for this Zacks Rank #3 (Hold) stock.
In the fiscal first quarter, Pictures sales declined 6% year over year to ¥320.4 billion mainly due to lower deliveries of the U.S. television series. SONY lowered fiscal 2023 guidance for the Pictures segment owing to negative impacts of strike conducted by WGA and SAG-AFTRA. This is expected to delay release dates for some theatrical releases in Motion Pictures and deliveries of television series in Television Productions.
Pictures revenues are expected to be ¥1,470 billion compared with the earlier projection of ¥1,520 billion for the current year. The I&SS segment is likely to bear the brunt of decreasing unit sales of image sensors for mobile products. I&SS revenues are now projected to be ¥1,560 billion compared with the previous forecast of ¥1,600 billion.
A Look at Estimates
SONY’s fiscal 2023 and 2024 revenues are expected to rise 2.9% and 6.5% year over year, respectively.
The bottom line is anticipated to improve 1.8% and 14.9% on a year-over-year basis in fiscal 2023 and 2024, respectively. The Zacks Consensus Estimate for fiscal 2023 earnings per share is pegged at $5.55, unchanged in the past 60 days.
SONY outpaced estimates in all the trailing four quarters, delivering an earnings surprise of 38.2%, on average.
The Zacks Consensus Estimate for Asure Software’s 2023 EPS has increased 35% in the past 60 days to 54 cents.
Asure Software’s earnings beat the Zacks Consensus Estimate in all the last four quarters, the average surprise being 676.4%. Shares of ASUR have surged 81.2% in the past year.
The Zacks Consensus Estimate for Synopsys’ fiscal 2023 EPS has gained 2.5% in the past 60 days to $11.09. SNPS’ long-term earnings growth rate is 16.4%. Shares of SNPS have climbed 73% in the past year.
The Zacks Consensus Estimate for VMware’s fiscal 2024 EPS has improved 5.9% in the past 60 days to $7.23.
VMware’s earnings outpaced the Zacks Consensus Estimate in two of the last four quarters, while missing it in the remaining quarters. The average earnings surprise stands at 1.2%. Shares of VMW have jumped 59.9% in the past year.
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SONY Rises 30.1% in the Past Year: Will the Uptrend Continue?
Sony Group Corporation (SONY - Free Report) is witnessing healthy momentum this year so far. Shares of the company have gained 30.1% in the past year compared with the sub-industry’s and S&P composite’s growth of 27.1% and 20.5%, respectively. Year to date, the stock has risen 9.5% compared with the sub-industry’s growth of 7.6%.
The increase in share price is driven by continued strength in the Game & Network Services segment (G&NS), its largest business segment, as well as in the Music segment.
In the last reported quarter, revenues from the GN&S segment were up 28% year over year to ¥771.9 billion. It sold 3.3 million units of Play Station 5. It continues to expect selling more than 25 million units of PlayStation 5 in the current year.
Image Source: Zacks Investment Research
SONY is also investing in research and development to capitalize on the lucrative opportunity presented by live services games and the sale of add-ons for titles. The company forecasts the market for add-on style games to become a $19 billion opportunity by 2026.
In August 2023, SONY acquired Audeze LLC to continue improving the audio experience of its PlayStation games. Apart from this, frequent product launches and strategic collaborations bode well. In June, the company announced its partnership with SQUARE ENIX for its latest game — FINAL FANTASY XVI.
The Music business segment is likely to benefit from higher recorded music and music publishing sales from paid subscription streaming services.
Driven by strengthening momentum in the GN&S and Music segments’ sales,Sony has revised its outlook for the fiscal year ending Mar 31, 2024. It now anticipates sales of ¥12,200 billion compared with the earlier guidance of ¥11,500 billion. Net income is now estimated to be ¥860 billion compared with the prior guidance of ¥840 billion. Operating income is projected to be ¥1,170 billion. Operating cash flow is expected to be ¥1,250 billion.
Weakness in the Pictures, and Imaging & Sensing Solutions (I&SS) segments is a concern for this Zacks Rank #3 (Hold) stock.
In the fiscal first quarter, Pictures sales declined 6% year over year to ¥320.4 billion mainly due to lower deliveries of the U.S. television series. SONY lowered fiscal 2023 guidance for the Pictures segment owing to negative impacts of strike conducted by WGA and SAG-AFTRA. This is expected to delay release dates for some theatrical releases in Motion Pictures and deliveries of television series in Television Productions.
Pictures revenues are expected to be ¥1,470 billion compared with the earlier projection of ¥1,520 billion for the current year. The I&SS segment is likely to bear the brunt of decreasing unit sales of image sensors for mobile products. I&SS revenues are now projected to be ¥1,560 billion compared with the previous forecast of ¥1,600 billion.
A Look at Estimates
SONY’s fiscal 2023 and 2024 revenues are expected to rise 2.9% and 6.5% year over year, respectively.
The bottom line is anticipated to improve 1.8% and 14.9% on a year-over-year basis in fiscal 2023 and 2024, respectively. The Zacks Consensus Estimate for fiscal 2023 earnings per share is pegged at $5.55, unchanged in the past 60 days.
SONY outpaced estimates in all the trailing four quarters, delivering an earnings surprise of 38.2%, on average.
Stocks to Consider
Some better-ranked stocks in the broader technology space are Asure Software (ASUR - Free Report) , Synopsys (SNPS - Free Report) and VMware . Each stock is sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Asure Software’s 2023 EPS has increased 35% in the past 60 days to 54 cents.
Asure Software’s earnings beat the Zacks Consensus Estimate in all the last four quarters, the average surprise being 676.4%. Shares of ASUR have surged 81.2% in the past year.
The Zacks Consensus Estimate for Synopsys’ fiscal 2023 EPS has gained 2.5% in the past 60 days to $11.09. SNPS’ long-term earnings growth rate is 16.4%. Shares of SNPS have climbed 73% in the past year.
The Zacks Consensus Estimate for VMware’s fiscal 2024 EPS has improved 5.9% in the past 60 days to $7.23.
VMware’s earnings outpaced the Zacks Consensus Estimate in two of the last four quarters, while missing it in the remaining quarters. The average earnings surprise stands at 1.2%. Shares of VMW have jumped 59.9% in the past year.