Nintendo Switch

Jefferies analyst Atul Goyal has instructed his company's clients to buy Nintendo stock because the Switch could end up being even more popular than the Wii.

In a letter to clients, Goyal said:

Switch has turned out to be a stealth hit and is positioned to drive Wii-type [the company's last successful console] software sales and profits cycle. Switch's appeal to core-gamers (vs. Wii to casual gamers) is likely to drive higher attach-rate and higher earnings than Wii-era.

Nintendo is also actively targeting and courting its core-gamers with a very powerful game line-up in the year 1 of Switch's launch. We believe this is the most powerful and attractive line-up of any Nintendo game console ever.

Goyal points out that Nintendo's Japanese shares rose more than 300 percent in the 12 months following the arrival of the Wii back in 2006, and compared this to the 25 percent jump since the Switch's March launch. In short, there's room for more growth. In the US, Nintendo shares are up more than 50 percent over the past 12 months and have risen around 112 percent in the past year.

Goyal goes on to predict that Nintendo's annual operating profit could rise to 189 billion yen in fiscal 2018 and 423 billion yen in fiscal 2019; he previously estimated that profit would be 29 billion yen in the current fiscal year.

Nintendo is hoping that the Switch will indeed match the sales performance of the Wii, and it has been rumoured that production has been increased to around 18 million units for this fiscal year.