One Analyst's View Of Nintendo's 'Super Mario Run' Release

According to Goyal, Nintendo's launch of "Super Mario Run (SMR)" on December 15 raises the question of whether Nintendo's stock already prices in a potential smashing hit.

Goyal's report focused exclusively on Nintendo's Japan-listed stock, which trades under the ticker 7974 on the Tokyo Stock Exchange. The report focused on two key aspects.

1. Stock Movement Since Mobile Game Announcement

Goyal noted that Nintendo's stock is trading at around ¥228,300 which is almost the same level where it traded at after Apple Inc. AAPL's CEO Tim Cook announced during the iPhone 7 launch event that SMR will be launched on iOS devices.

The day after Cook's presentation Nintendo's stock rose from ¥24,500 and closed at ¥27,975 after Wednesday's trading session.

2. Analysts Aren't Convinced

Consensus estimates for Nintendo's fiscal third-quarter 2017 and 2018 haven't gone up since the game's announcement during the iPhone 7 launch event. In fact, estimates have come down.

Back in September, consensus estimates called for an operating profit of ¥46 billion and ¥110 billion in the third quarter of fiscal 2017 and 2018, respectively. Since then it has been revised to ¥39 billion and ¥106 billion, respectively — at a time when the mobile game is considered to be a "very clear incremental positive."

"Not only does SMR contribute to higher profits this year (via iOS) and next year (via Android), the weaker JPY is also an incremental positive," the analyst expanded. "That should have been enough for sell-side estimates to rise significantly from a low-base. But that is not the case. We believe that sell-side has not yet factored in the potential revenues and profits and is waiting to see how the game actually performs."