Capcom (OTCMKTS:CCOEY) has been in something of an up-and-down battle lately. Some signs suggest it's doing well, while other signs suggest it's in the fight of its life. With recent trading bringing the company up a healthy 13.6%, it's worth taking another look at one of the biggest names in gaming to see what's been going on lately.
A Wild Tale of Ups and Downs
The news around Capcom lately has been a bit erratic to say the least. One of the biggest points hitting Capcom today—and likely the biggest cause for the pop up in recent trading—is that, effective today, Capcom is launching a two-for-one stock split, effectively doubling anyone's positions in Capcom. The overall share value is reportedly expected to remain at least close to stable, but the total number of shares will ramp up substantially.
Reports note that the move was done as a way to “improve the liquidity of the company's stock”, as well as a means to “expand its investor base by reducing the stock price per investment unit.” The move came at a particularly exciting time for Capcom; just last week, the company's stock hit an all-time high, reports noted, on the strength of its release of “Monster Hunter Rise”, backed up by a new branded Nintendo Switch version as well as three Amiibo figures that offered access to custom armor sets in the game.
The Switch exclusive version of “Monster Hunter,” reports note, is likely to prove big business for Capcom. It's expected to add 20% operating income to its fiscal year, reports note, thanks in large part to solid pre-order numbers so far as well as planned updates. It was such a big deal in Japan that reports noted one technology company—a VR development firm called Mark-on—declared March 26 to be “MonHun Day”, allowing all the company's employees a day to enjoy “Monster Hunter.”
A Cautiously Bullish Analyst Front
Meanwhile, the latest word on the analyst front is a bit slow, based on our latest research. Still, reports put Capcom quite in favor of a “buy”, a development that's been the case since as far back as October 2019.
It's not a “buy” by much, of course, and the ratings have seen some turn toward the bearish. Capcom carried its single “buy” rating forward from October clear to July 2020, when a second “buy” rating entered the picture. It didn't remain for long, though, as by October 2020, the second “buy” had departed leaving us with just one “buy” rating again. That would remain the case up until the present day. Price targets, meanwhile, are sparse on the ground with the lone “buy” rating not issuing one.
Meanwhile, outside of the pool from our studies, reports note that the Zacks Investment Research consensus estimates started March as a “strong buy”, but ended March downgraded to a “hold” with the release of reports back on Tuesday.
Can the Growth Continue? Signs Point to Yes.
Capcom has had a long if somewhat checkered history with video games; many gamers are still smarting over the issues surrounding “Metal Gear Solid” and the interactions between Capcom and creator Hideo Kojima. Yet here, we see not only recent gains from the “Monster Hunter” series, but we also have to keep in mind that it's just a few short weeks until the launch of “Resident Evil: Village.” That's like to give Capcom another leg up on the likely strength of that release. However, the release calendar does seem to fall off a bit there; there are rumors of a “Resident Evil 4” remake, which isn't a surprise given how well the first three “Resident Evil” remakes did, and also potential word for a release of “Street Fighter 6.” That one is an example of history repeating itself; back in 2016, when the Capcom Cup series made the move from “Street Fighter 4” to “Street Fighter 5”, the previous champion was not automatically qualified to compete in the next year's release. Reports note that's also happened with the 2021 Capcom Cup, so some are looking for the move to “Street Fighter 6” to follow.
Good news for investors, of course, but that still leaves Capcom a bit light on titles to make an appearance in the holiday shopping season, which is now about six months away. There will likely be a little help from an upcoming film release, “Resident Evil: Welcome to Raccoon City”, set to release September 3, but possible DVD sales likely won't help as much as upcoming game sales might. With Covid-19 still keeping many indoors or off work—or at least working remotely—game sales should continue to post decent results, especially when backed by big names and triple-A releases.
Still, with a reasonably bullish investor picture, some decent material in the pipeline and some big wins already chalked up, Capcom is starting to look like at least a decent short-term investment. It may be a good idea to take advantage of that newly-minted value, but be sure to keep an eye on it in case Capcom can't follow up its short-term winning slate.
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