Capcom Earnings: Modest Beginnings but Much to Anticipate; Fair Value Remains JPY 3,000

Although Capcom’s revenue and operating income for the June quarter fell 32.5% and 46.4%, respectively, they were within our expectations due to a weaker game title lineup than last year. Even though June-quarter game sales were slightly below its expectations, the company made no change to the full-year guidance of 50 million units of game sales and JPY 64 billion of operating income, which we believe signifies the company’s confidence in the release of AAA titles in the second half. We lower our game sales forecasts for the first half but raise those for the second half as we assume the company will concentrate promotion efforts in the second half to ensure the successful launch of new titles for the Resident Evil and Monster Hunter series. We retain our view that the company will be able to achieve its unit sales and operating income guidance for the fiscal year ending March 2025, as we remain confident in the strength of Capcom’s flagship IPs.