Pokemon Go craze baffle investment banks’ experts

Tokyo, July 27: Pokemon Go’s stunning surge in popularity is leaving few more befuddledthantheanalystswho cover Nintendo for the world’s biggest investment banks.

Take Bank of America’s Hiroyasu Eguchi. He cut his rating on the stock in April and lowered his price target on July 6 — one day before Pokemon Go debuted in the US and shares began a tear that more than doubled their price over two weeks. Eguchi reversedcoursethisweek:On Monday, he upgraded the stock to a buy rating and set a price target that’s almost double the current level.

He isn’t the only one playing catch up. One week prior to Pokemon Go’s release, Mitsubishi UFJ Morgan Stanley Securities Co’s Hirotoshi Murakami cut his Nintendo pricetargettothelowestsince April 2015. After the stock soared, Murakami backtracked and now expects shares to climb 71% from Tuesday’s close.

The game’s groundbreaking debut took almost everyone by surprise, and Nintendo’s communication hasn’t helped.TheKyoto-basedcompany stood by for more than two weeks as the game’s release added $20 billion to its market value. Then, in a stunning announcement after 7 pm on Friday in Tokyo, it said the earnings impact from the game will be limited. When shares traded Monday, they fell the most in 26 years.

“It shows there’s not quite enough discipline in the Japanese market about what you can say, when you can say it, and how you have to say it fairly to everybody,” said Nicholas Benes, representative director of the Board Director Training Institute of Japan. “We need a little bit more discipline in the rules that purport to be regulating fair disclosure.”

Nintendo shares fell 5.5% to 22,305 yen in Tokyo, before the company reported a wider-than-projected loss of 24.5 billion yen for the fiscal first quarter. While the hit game wasn’t reflected in the report, the company had more bad news to share: it said Pokemon Go Plus, an accessory gadget, will be delayed until September, and the stock fell as much as 12% in Ger many.

Another point of exasperation for analysts and investors is the lack of disclosure about Nintendo’s financial interest in Pokemon Go. Nintendo doesn’t own the game outright, as investors may have thought. Rather, the game was jointly developed by Pokemon Co and Niantic. Bloomberg