The Sony Group Corporation has, for a long time, been a favourite stock pick for investors. It has a track record of generating impressive returns, such as the +146% capital gain posted between March 2020 and January 2022.
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With its strong brand recognition, Sony is seen as a safe bet, but optimising returns relies on picking the right time to enter a trade. The Sony stock forecast below draws on technical and fundamental analysis and outlines the reasons to buy Sony and how to identify the best time to do so.
Table of contents
Who is Sony (NYSE: SONY; TSE: 6758)?
Sony Group Corporation designs, develops, and manufactures a range of globally recognisable electronic equipment and devices for the consumer, professional, and industrial markets. Its move into online streaming in the form of Sony Interactive Entertainment has excited investors and complements its operations in a range of other sectors.
Sony's other interests are diverse, ranging from film production to life insurance, making it hard to factor in every permutation that might influence a Sony stock valuation.
Sony is a global brand headquartered in Tokyo, Japan. The primary listing of Sony stock is on the Tokyo stock exchange, but to accommodate international investors, it is also listed on the New York Stock Exchange. The ticker of the NYSE listing changed from SNE to SONY in 2021.
Most good brokers offer their clients the opportunity to buy shares listed in Japan or New York. The Tokyo listing is priced in Japanese yen. Therefore, those with accounts not denominated in yen must factor in that total returns in Japan-listed shares will incorporate forex price moves and price moves in the underlying stock itself.
The purpose of American Depositary Receipts (ADRs) is that investors can easily buy the same stock as the foreign listed one. This Sony stock forecast will therefore use data and reports relating to both stock listings.
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Where will the Sony Stock Price be in 3 Months?
2022 was a bad year for the tech stock sector, and despite its size and reputation, Sony was not immune from the sell-off. Sony stock posted a yearly loss of 39.6% as investors fled growth and tech stocks in the face of concerns about the state of the global economy.
Inflation was the key talking point among investors in 2022. Rising prices stirred central banks into action, with the US Federal Reserve hiking interest rates above 4.5%, the highest since 2007. The Bank of Japan was the exception to the rule and didn't push rates higher due to deflationary pressures in the Japanese economy.
The combination of higher borrowing costs and the risk of a recession is bad news for a firm such as Sony that sells consumer goods to customers facing a cost-of-living crisis. Gauging how those two factors will influence revenues is trickier during inflation.
With standard stock valuation models being based on future revenues, the fact that so many variables are in play has resulted in Sony stock price forecasts widening. That has, in turn, resulted in the short-term price moves in Sony becoming increasingly volatile.
Concerns about inflation and the hawkish policy of the US Federal Reserve look set to dominate market sentiment for the next three months. That suggests there could be further falls in the price of Sony stock. At the same time, value investors will be looking to build into positions in anticipation of a market rally once the investor mood turns bullish.
Since the start of 2023, Sony's stock price has traded above the 100 SMA on the Daily Price Chart and the 20 SMA on the Weekly Price Chart. These two metrics have guided the Sony share price upward to a point where it is now +40% up from the lows of October 2022.
As long as Sony stock trades above the SMAs and the supporting trendline, there is every reason to believe the upward momentum will continue. That could see the Sony stock price test the psychologically important $100 per share price level and, in extension, the December 2021 price high of $128.30.
Weakness in the Sony share price was driven by long-only investors rotating out of positions rather than short-sellers targeting the stock. Reports show that as of 24th April 2023, only 0.17% of the total stock is sold short, which equates to two days of average trading volumes.
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Where will the Sony Stock Price be in 1 Year?
The 1-year Sony stock forecast allows more room for the firm's actions to determine which way the share price heads, even if macroeconomic headwinds still play a part.
Those headwinds are sizeable for consumer-facing tech stocks. Guidance from the US Fed is that interest rates will remain high until inflation is confirmed to be retreating to 2%, and many analysts predict interest rates won't start to drop until 2024.
The Bank of Japan's decision not to raise interest rates at the same rate as its peer group has created a currency effect which could help boost Sony's profits. With the yen depreciating against other major currencies, Sony products manufactured in Japan will be relatively cheaper on international markets.
Sony has navigated challenges like recession many times in its 76-year history. The firm's agenda for 2023 includes revamping some traditional business practices, which could help the share price gain momentum.
The products the company chose to promote at the all-important Consumer Electronics Show (CES) in Las Vegas in January 2023 demonstrate the firm's change of focus. Sony did not include TVs in that flagship event for the first time in its history. Instead, it tapped into the booming video game market by using the event to show off its PlayStation VR2 product.
A spot at the CES expo was also made available for Sony's electric vehicle products. Sony Honda Mobility's new Afeela EV was taking to the stage instead of TV monitors.
This change in direction is good news for investors. It indicates the firm is a well-integrated business operating in growth sectors that can balance out investment in innovative ideas by relying on reliable income streams to keep its balance sheet healthy.
The VR2 product was released to consumers in February 2023, and early reviews are positive. Wired.com's review of VR” described it as being “As impressive as it is expensive”, which points to Sony securing a strong position in a high revenue-generating market sector.
Sales of VR2 will feed into the bottom line before the year is out. While EV sales won't begin until 2025, investors willing to back Sony's take on that growth market can start building stock positions in SONY stock now.
Quarterly earnings announcements over the next 12 months will allow analysts to test whether this growth keeps up with forecasts. Each statement can be expected to give a steer to the stock price. The numbers given the greatest significance will be those relating to gaming and music streaming.
Where will the Sony Stock Price be in 5 Years?
With the Price to Earnings (P/E) ratio of Sony stock currently at 12.1, it looks undervalued compared to the broader tech market. The P/E ratio for the sector as a whole being 29.63. For Sony's P/E ratio to align with its peer group, earnings must fall, or the stock price must increase. There are good reasons to believe the latter is more likely to occur.
Sony is the world's top music publisher, and Sony Music has benefitted from the growth of online music services that have revolutionised the industry. Sony is one of the winners in that revamp of how music is consumed and has secured profit margins of nearly 20% in its music division.
The firm is also investing in developing a pipeline of new artists and keeping up with new trends. During an investor Q&A session, a spokesperson stressed the firm's ambition to keep up to date with developments. Speaking of the increased influence of platforms such as TikTok, it was explained that
Those represent additional exposure opportunities for music, so they are both a risk and an opportunity.
The firm's statement continued:
“History plainly teaches that the music industry is one where new platforms are apt to rise and be prone to technological disruption of the market. As such, we believe it important to stay on top of the latest trends and respond accordingly.”
Source: Sony Corp
Sony Group earnings have held up relatively well over the last two years despite geopolitical problems, supply-side issues, and global economies raising interest rates to deal with inflation. With a more favourable wind, the Sony stock price could appreciate significantly.
In a survey of analysts, CNN reported that the 21 analysts offering 12-month-plus price forecasts for Sony Group Corp have a median target of $117.61. The top-of-the-end estimate is $152.70, and the low estimate is $90.22, which is in line with the current share price ($91.71). Should price hit the median estimate target, that would represent a +28.24% increase from current levels.
Quarterly earnings announcements over the next 12 months will allow analysts to test if this growth keeps up with forecasts. Each statement can be expected to give a steer to the stock price. The numbers given the greatest significance will be those relating to gaming and music streaming.
Is Sony a Good Buy?
Sony's relatively complicated business model means there is some difficulty in answering the question; Sony buy or sell? While the more traditional revenue streams are exposed to the risk of an economic downturn, the firm's positioning in key growth sectors results in the answer leading toward ‘buy.'
The sell-off in the stock in 2022 impacted Sony more than was warranted, and with solid fundamentals, Sony shares can be expected to rebound. Timing is everything, and the next three months can be expected to be challenging. But the 1-year and 5-year forecasts suggest building a position is best done sooner rather than later.
There are potential trip-hazards to avoid, but short-term price dips could offer an opportunity to buy Sony stock and take a position in one of the market's most exciting large-cap tech stocks. That partly explains why, of the 24 analysts following the stock, 17 tip it as a ‘buy' and three as a ‘hold.
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Final Thoughts
Sony stock certainly looks tempting at current price levels. Even big names can sometimes find themselves undervalued when market sell-offs occur.
Those who decide to buy Sony stock would do well to ensure their broker provides high-quality news updates, price alerts, and attractive T&Cs. Low commissions and holding fees are worth looking for, as it could be the case that Sony stock bought now turns out to be a long-term position.
This list of good brokers includes firms reviewed by AskTraders analysts. The brokers are well-regulated and provide all the tools and services required to get your trading off to the best possible start.
