After Nintendo Rally, Stocks To Watch Amid Pokemon Go Craze

Since the release of Pokemon Go in the U.S., Australia and New Zealand on July 6, shares of Nintendo have nearly doubled, soaring about 87%.
By The Fly Staff ,

Since the release of Pokemon Go in the U.S., Australia and New Zealand on July 6, shares of Nintendo (NTDOY) have nearly doubled, soaring about 87%. While some Wall Street analysts do not expect this bullish move to last for much longer as the game was not directly developed by the company, several have speculated on what this Pokemon Go craze may mean for other names, with all augmented reality players emerging as potential big winners.

AUGMENTED REALITY GAME: Pokemon Go is a GPS-based game that allows players to capture augmented reality Pokemon monsters that appear on their smartphones as they are walking around in real-world surroundings. The game was mainly developed by U.S.-based Niantic, a Google (GOOG) - Get Report ; (GOOGL) - Get Report spinoff, and The Pokemon Company, a joint investment by the three businesses holding the copyright on Pokemon: Nintendo, Game Freak and Creatures.

AR COMMERCIALLY VIABLE: On Wednesday, Baird analyst Colin Sebastian told investors that while Pokemon Go's "huge" initial success may fade, it further legitimizes augmented reality as commercially viable technology and can be seen as a positive for others with significant investments in AR and virtual reality technology, including Google, Alibaba (BABA) - Get Report and Facebook (FB) - Get Report . Though some may view Pokemon Go's success as potentially negative for social platforms, Sebastian believes the viral support of the game lends to increased engagement on social networks like Facebook and Twitter (TWTR) - Get Report . Furthermore, he expects more mobile games to "borrow" elements of Pokemon Go, such as the mixing of virtual and real worlds.

POWER MANAGEMENT DEMAND: Roth Capital analyst Dave King estimates that Pokemon Go will provide a 15% boost to ZAGG's (ZAGG) - Get Report earnings per share, given his checks of about 50 retail locations and web trend analysis revealing increased power management product demand. Longer-term, however, it appears other brands are taking share at the expense of the company's mophie brand, such as Apple's (AAPL) - Get Report smart battery case, the analyst told investors in a note issued Thursday. Like some of his peers, King also questioned how long the Pokemon phenomenon will last, given the potential for user fatigue and similar previous game crazes. The analyst reiterated a Neutral rating on ZAGG's stock and raised his price target on the shares to $6 from $5.

POTENTIALLY INTERESTING, JUST NOT YET: In a separate note to investors Thursday, JPMorgan analyst Sterling Auty speculated what this game craze could mean for Akamai Technologies (AKAM) - Get Report , which provides cloud services for delivering, optimizing and securing content. While he believes it could hold the potential to drive "nice" revenue depending on the level of downloadable content and how the game decides to enable trading and battling, the analyst does not expect Pokemon Go to drive a significant amount of initial revenue as the predominance of interaction is across the mobile network and the game itself is only about 160MB on the Apple's iPhone. He reiterated a Neutral rating on Akamai's shares.

PRICE ACTION: In morning trading Friday, shares of Nintendo ADRs trading in New York have gained another 7% to $32.75. Since July 6, the New-York traded ADRs of the Japanese company have risen about 87%.

Reporting by Jessica de Sa-Mota.

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