The press attends E3 to cover games and speak with their creators, and retailers attend to determine what they should be buying this fall. But analysts also pay close attention to gaming's biggest trade show to inform their predictions about industry stocks -- and Panoptic Management Consultants believes Nintendo, Activision, and Ubisoft were bolstered by their show presence, while Sony failed to sufficiently impress.
"Nintendo 3DS stole the show," Panoptic's Adam H. Kraus told Gamasutra.
Panoptic's Asif A. Khan said that among the three major console manufacturers, each of whom displayed upcoming hardware at E3, Nintendo (NTDOY) has the most to potentially gain, and the firm is recommending a buy on its stock.
"Nintendo is the company most levered to their new product cycle," said Khan. "If 3DS is a success, the company could see huge sales growth."
The analysts were more cautious in their optimism for Microsoft (MSFT) and its Kinect; the company is issuing a "hold" recommendation on its stock.
"The technology is compelling but it needs more unique quality software to make it a success," Kraus commented, while Khan suggested Kinect could be "the beginning of a multi-generational product cycle."
Khan believes Ubisoft (UBI.PA) came out strong at E3 thanks to its Your Shape: Fitness, calling it "one of the killer launch titles for Kinect."
Less enthusiasm could be mustered for Sony (SNE), whose slate of 3D hardware and the multi-component Move motion interface was overwhelming to Panoptic's analysts.
"The last hour of the Sony press conference was like being repeatedly hit in the head with a sledgehammer that had 'EVERYTHING' written in bold on it," said Khan, issuing a "don't buy" on the stock. "3DTVs, 3D Glasses, Move controllers, PlayStation Eye, and still have money left over for the games? Who can afford this?"
"The question is whether consumers will view the Playstation Move as a big enough improvement over the Nintendo Wii motion controller to warrant its purchase," Kraus added. "The Move titles we tried played very similarly to Wii and Wii MotionPlus titles."
Outside of motion gaming, Kraus said Electronic Arts (ERTS) had "a very competent showing," with "a lot of potential million sellers on display," enough to suggest a buy on the stock.
As for Activision (ATVI)? Its E3 lineup didn't exactly blow the firm away, but the publisher has enough high-value franchises that it still earns a "buy" recommendation.
Plus, Khan observed of Activision's notorious lavish E3 extravaganza, "if you can afford a $6 million party, you are probably doing okay."
Panoptic Management Consultants requested the following disclaimer be included with this article:
Investors should do their own research or consult their advisor before acting on this information. Panoptic Management Consultants, Inc. is a Registered Investment Advisor that was founded in 2008. Please go to our website www.panopticinvesting.com for more information about fundamental investing as well as technical analysis. For prospective client inquiries please contact us at firstname.lastname@example.org
At the time of this article CEO Asif A. Khan, CPA, his family members and/or Virtue LLC had the following positions:
At the time of this article, clients of Panoptic Management Consultants Inc. had the following positions: