Buy Nintendo Stock, Analyst Says. The Switch 2 Console Is a Big Hit.

The Nintendo Switch 2 sold more than 3.5 million units worldwide in the first four days. (KAZUHIRO NOGI/AFP via Getty Images)

Nintendo is poised to surpass the original Switch console’s sales with its recently released Switch 2 in the coming years. That is good news for its stock.

On Tuesday, Wedbush analyst Alicia Reese reiterated her Outperform rating on Nintendo and reaffirmed her price target of 14,000 Japanese yen (about $94.22). The forecast is 9% above the current price level.

“We expect Nintendo to substantially outperform our original Q1 revenue estimate, given the positive sales data for the Switch 2 worldwide,” she wrote.

The Nintendo Switch 2 is likely to sell much better than its predecessor in its first two years of sales, which will lead to more software sales due to the higher installed base of consoles, Reese said.

“Should demand for Switch 2 outpace substantial supply we think there is considerable upside to our estimate this year,” she wrote.

In June, the Japan-based videogame publisher announced the Nintendo Switch 2 sold more than 3.5 million units worldwide in the first four days, making the system the fast-selling Nintendo console ever at launch. The Switch 2 was released on June 5.

Nintendo’s American depositary receipts were up 0.9% on Tuesday. The stock is up 48% this year.

Write to Tae Kim at tae.kim@barrons.com