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SONY Mulls Partial Spin-Off of Financial Services Segment

SONY Corporation SONY recently announced that it is mulling a partial spin-off based on the premise of the listing of the shares of Sony Financial Group Inc. that operates Financial Services business to boost growth.

SONY further added that its assessment involves holding slightly less than 20% of the shares of Sony Financial Group. This will enable Sony Financial Group to leverage the Sony brand and continue to generate synergies with parent company post completion of the spin-off.

Although no specific time for execution has been established by the company, Sony noted that it will continue to assess this strategy in the current fiscal year. It will consider executing the spin-off in the next two-to-three-year period.

Sony Corporation Price and Consensus

Sony Corporation Price and Consensus
Sony Corporation Price and Consensus

Sony Corporation price-consensus-chart | Sony Corporation Quote

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In the last reported quarter, Financial Services sales were up 76.4% year over year to ¥493.3 billion. Operating income was ¥33.7 billion compared with ¥47.8 billion in the year-ago quarter.

In the fiscal year, sales from the segment were down 5%, reflecting a decline in revenues at Sony Life. A fall in net gains on investments in the separate accounts was also a concern.

For the current year, Financial Services’ sales are expected to be down 40% year over year mainly due to deducting the amount equivalent to the surrender benefit from the revenues. Revenues were earlier included in insurance premium revenues due to the adoption of IFRS 17.

Sony’s performance is being driven by continued strength in the Games & Network segment. The company now expects to sell more than 25 million units of its PlayStation 5 in the current year. Strength in Music, Pictures, and Imaging & Sensing Solutions segments were other tailwinds. Management expects sales of ¥11,500 billion for fiscal 2023.

At present, Sony has a Zacks Rank #3 (Hold). Shares of Sony have gained 7.5% compared with the sub-industry’s growth of 5.6% in the past year.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

Stocks to Consider

Some better-ranked stocks in the broader technology space are Badger Meter BMI, Simulations Plus (SLP) and Blackbaud BLKB. BMI sports a Zacks Rank #1 (Strong Buy) whereas SLP and BLKB currently carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Badger Meter’s 2023 earnings has increased 4.7% in the past 60 days to $2.69 per share. BMI’s earnings beat the Zacks Consensus Estimate in the last four quarters, the average being 5.3%. Shares of BMI have surged 79.4% in the past year.

The Zacks Consensus Estimate for Simulations Plus’ fiscal 2023 earnings has improved by 1 cent in the past 60 days to 66 cents per share. Shares of SLP have lost 5.7% in the past year.

The Zacks Consensus Estimate for Blackbaud’s 2023 earnings is pegged at $3.68 per share, up 7.3% in the past 60 days. The long-term earnings growth rate is anticipated to be 10.4%.

Blackbaud’s earnings beat the Zacks Consensus Estimate in the last four quarters, the average being 10.4%. Shares of BLKB have increased 20.6% in the past year.

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Badger Meter, Inc. (BMI) : Free Stock Analysis Report

Simulations Plus, Inc. (SLP) : Free Stock Analysis Report

Blackbaud, Inc. (BLKB) : Free Stock Analysis Report

Sony Corporation (SONY) : Free Stock Analysis Report

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Zacks Investment Research