Nintendo: Mario 2 A Megahit And Profit In J-Curve With Improvement Ahead

Nintendo (NTDOY) is rated a buy, supported by upcoming software and IP-driven profit growth starting in the next fiscal year. Lower margin sales have been frontloaded in our view. Pokopia's strong sales and the Mario 2 movie are set to deliver significant margin and profit boosts over the next fiscal year, with the former also helping in Q4. Switch 2 hardware margins are pressured by region-locked Japanese models, but due to the low price of these models these sales have likely been aggressively frontloaded.