Sony shares surge after stronger fiscal year 2024 earnings forecast

Shares in Sony Group surged as much as 10.7% Friday after the company raised its revenue and profit forecast for its current financial year ending in March.

The Japanese technology and entertainment conglomerate announced on Thursday it is raising its outlook for annual operating profit to 1.34 trillion yen ($876 billion), a 2% increase from the previous financial year.

It also expects full-year sales to hit 13.2 trillion yen, 4% higher than its November forecast, on the back of stronger performance in its gaming and music business in the third quarter.

For the December quarter, the company’s operating income came in at 469.3 billion yen, up 1% from a year before.

Sony — which grew to prominence in the 1980s for its consumer electronics products like the Walkman — has expanded its offerings to include movies, music and gaming consoles like the popular PlayStation.

Operating profit in its gaming business was up 37% in its fiscal third quarter, driven by higher sales in network services, hardware and third-party software.

The company sold 9.5 million units of its PlayStation 5 console in the December quarter, up from 8.2 million in the same period a year ago. This brings total lifetime sales of the PS5 to 74.9 million units, based on Sony’s results for the most recent quarter and previous years.

Speaking at its results briefing on Thursday, Sony’s president and CEO Hiroki Totoki noted that the number of monthly active users across the PS platforms in December rose 5% year on year to hit 129 million accounts, “the highest number in PS history.”

“Total play time also increased 2% year-on-year, marking the seventh consecutive quarter of year-on-year growth,” he added.

Damian Thong, head of Japan equity research and senior research analyst, technology sector, at Macquarie Capital, said the company has been looking “rather cheap over the last few months [with] some of its peer groups having strong runs,” naming Nintendo as an example.

He believes Sony’s stock has “some ways” to advance.

Going forward, Thong is particularly optimistic on the outlook for Sony’s gaming division.

“They have a good slate on the first-party side and significant launches on the third party side, and with cost cuts they made last year, I’m pretty confident they’ll see strong growth in games in the next fiscal year,” he told CNBC’s Street Signs Asia on Friday.

— CNBC’s Ryan Browne contributed to this report.