Bernstein starts coverage on Sony stock, rates ‘outperform’ with 22% upside

Investing.com -- Bernstein initiated coverage of Sony Group Corp (NYSE: SONY). with an "Outperform" rating given a leaner and more efficient operation poised for earnings surprises over the next 12-18 months, supported by a robust product pipeline and business diversification.

Key drivers include the upcoming launch of the iPhone 17 and "Grand Theft Auto VI," which Bernstein expects will fuel growth in Sony’s image sensors and PlayStation segments, respectively.

Brokerage projects Sony’s Imaging&Sensing Solutions division to see 19% operating income growth over the next two years, driven by demand for advanced sensors in smartphones and automotive applications.

On the gaming front, the PlayStation 5 Pro is selling strongly, while upcoming titles like "Ghost of Yotei" and GTA VI are expected to boost engagement and earnings. Additionally, Sony Music and anime ventures, including Crunchyroll and Aniplex, are set to benefit from rising global demand for Japanese content.

Bernstein also highlighted the potential valuation uplift from the October spin-off of Sony Life, simplifying the business and unlocking value for shareholders. With shares trading at 15x FY3/27 estimated earnings, Bernstein set a price target of ¥3,900, implying a 22% upside.

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