Time to Be Bullish on Sony Stock?
Sony Corp (ADR) (NYSE:SNE) is one of the best-rated companies. However, SNE stock is at risk from investors’ concerns about the slowdown in the mobile industry worldwide. Still, the weak yen adds strong value potential to Sony stock, given its export-heavy businesses.
The weaker yen make several ranges of Sony products more competitive. Meanwhile, the “race to the bottom” approach to interest rates suggests Sony will benefit for the next few quarters. (Source: “Sony Should Benefit From Weaker Yen,” TheStreet.com, February 8, 2016.)
Apple Inc. has already shown that even good results, based on solid profits, can compromise the stock price. Investors fussed over the latest “iPhone” sales. Analysts responded by cutting their target price for the stock over tepid demand for the latest iteration of the iPhone 6.
There is a sensation that the smartphone market is saturated. The same analysts, who disapproved iPhone revenue, believe the next generation, the “iPhone 7,” will revive the market. In this regard, Sony has preferred to slow production and marketing, focusing only on higher value-added models. The kind that will add to Sony’s operating income.
Smartphones have become such an important component that lower sales produce a domino effect. Lower sales of smartphones have reduced demand for Sony’s photo sensors and batteries. Many phone makers use these Sony components. Sony said it lost $97.0 million alone, with revenues falling 12.6%. Yet, Sony remains strong in other areas.
The gaming branch, for one, continues to have success with the “PlayStation,” of which Sony sold 45% more than the previous year. Sony also sold more cameras and home entertainment units. Another area of growth is in the automotive sector. Car sales are increasing worldwide. So will demand for Sony’s sensors for autonomous driving technology, one of the driving factors of future growth in the sector. (Source: Ibid.)
As for smartphones, Sony has a chance to gain market share with its latest “Xperia.” Sony is betting on the future with its dual-lens camera technology. Not only does Sony equip its own products with the lenses, but it also supplies dual-lens technology to other manufacturers, including Apple. (Source: “Sony says dual-lens camera tech launching with ‘major smartphone players’ in next year,” AppleInsider, February 3, 2016.)
Sony Is Countering Slowing Smartphone Sales
While double-lens technology may not be ready in time for the “iPhone 7,” Sony is targeting 2017 as the launchpad for the dual-lens market. This means the eventual “iPhone 7s” versions will have it. Sony sensors have appeared in big-name LG, Samsung, and Motorola phones like the “Moto X,” “G4,” and “Galaxy S6.” (Source: “Seeing double: Sony’s dual-lens cameras are coming to big-name smartphones,” Stuff, February 4, 2016.)
A camera with a dual lens is no simple gadget. It can revolutionize the way smartphones take photos. For example, it allows for improved zoom quality, panoramic shots, and better overall photo quality.
Even though Sony stock closed at $20.82 in the last trading session (at the bottom of its 52-week range of $19.90–$32.95), two Zacks Research analysts have rated it a “Strong Buy.” (Source: “Stocks With Strong Buy Signals: Sony Corp (ADR) (NYSE:SNE), Array Biopharma Inc. (NASDAQ:ARRY), Koninklijke Philips NV (ADR) (NYSE:PHG),” News Oracle, February 10, 2016.)
Sony’s last quarter (ended December 31, 2015) revealed higher earnings for the period. It reported a net profit of $1.0 billion out of total revenue of $21.5 billion. Those numbers translate to a 33.5% and 0.5% increase, respectively, over the previous year’s numbers. Overall, the results beat analysts’ expectations.