Electronics giant Sony (NYSE:SONY) may have the upper hand in the console wars right now, but that doesn’t mean it’s having things all its own way. In fact, reports note that Sony has already halted production on one of its major peripherals because it has a backlog of inventory. That plan appealed to investors, though, who sent shares up over 2% in the closing minutes of Monday’s trading session.
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Sony has halted production on PSVR2 systems, the PlayStation Virtual Reality system. It was released just under 13 months ago, and over two million of them were produced. However, sales are in an open decline, leaving a lot of PSVR2 systems unsold.
At $550 each, a hefty slug of unsold units means a lot of missed revenue opportunity, not to mention some hefty carrying costs on all that extra unsold inventory. It didn’t help matters that Sony announced several games for the PSVR2, but none of them were actually from Sony proper.
A Different Hardware Refresh Afoot
Further, Sony might have plans to bring out a mid-season hardware refresh. The PS5 Pro, as it’s known, already has developer kits—devkits—out in the wild, and Sony studios are already testing them. Reports suggest the PS5 Pro will actually be faster than the PS5, and significantly, too; reports place them up to three times faster. That likely won’t do Microsoft (NASDAQ:MSFT) any favors, as the Xbox was already lagging in sales.
Is Sony a Buy or Sell?
Turning to Wall Street, analysts have a Strong Buy consensus rating on SONY stock based on three Buys assigned in the past three months, as indicated by the graphic below. After a 0.93% rise in its share price over the past year, the average SONY price target of $107.50 per share implies 20.71% upside potential.
