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Why Sony's Shares Gained 19% in April

By Anders Bylund - May 9, 2019 at 4:49PM

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The entertainment giant published solid fourth-quarter results, strong enough to inspire a highly critical analyst investor to back down.

What happened

Shares of entertainment-and-electronics conglomerate Sony (SONY 1.39%) rose 19.3% in April 2019, according to data from S&P Global Market Intelligence. This boost, driven by a decent fourth-quarter report and some analyst chatter, followed a 12% drop in March, so it's fair to call this a rebound.

So what

Sony gained some new competition in the video gaming market in March, then made investors forget about that threat by doubling its bottom-line earnings year over year on a mere 1.5% revenue boost. Activist investor Dan Loeb, who has been prodding Sony's board of directors with different ideas on how to grow the company, stepped back and called a truce. Later, analyst firms Jefferies and Macquarie upgraded Sony's stock to a buy.

Man in green sweater and black pants sitting on a white couch. He's leaning into the TV screen, wearing headphones and wielding a video game controller.

Image source: Getty Images.

Now what

Investors take notice when companies post results strong enough to inspire even their harshest critics, including Third Point's Dan Loeb, in Sony's case. The entertainment industry was never a serene market sector but Sony appears to be finding ways to stay relevant in a cutthroat environment.

At this point, Sony's shares trade 16% above their 52-week lows at a very affordable 8.7 times trailing earnings, or 5.6 times free cash flows. In a nutshell, Sony stock is priced for absolute disaster, but the company might deserve a more positive market-maker review.

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