Sony shares are sitting at their highest level since June 2001, despite a dip on Wednesday.
Analysts say there could be further upside in the next year as Sony prepares to launch the flagship PlayStation 5 games console.

The Japanese electronics giant posted better-than-expected earnings on Tuesday
for the April to June quarter and provided an outlook ahead of consensus.

On average, analysts polled by Refinitiv expect Sony shares to hit 9,538.95 yen ($90.35) in the next 12 months,
around 9.5% upside from Wednesday’s opening price, buoyed by the company’s strong gaming business and recovery in its image sensor division.

Sony’s 19-year high share price is a vote of confidence by investors in the multi-year turnaround plan that was initiated by previous CEO Kazuo Hirai.
Hirai took the role in 2012, and was succeeded by Kenichiro Yoshida in 2018.

Under the two CEOs, Sony has put a large emphasis on its gaming division. In fact,
in Sony’s fiscal first quarter that just ended, the company’s game and network services unit accounted for about 54% of total operating profit.

Sony forecast a modest year-on-year rise of 0.6% in the gaming division’s operating profit at 240 billion yen for its fiscal year that concludes at end March 2021.
That is even as Sony estimates that group profit to decline.
Revenue for the gaming business is forecast to jump over 26% year-on-year to 2.5 trillion yen, according to the company.

With people staying home more in the second quarter of the year due to coronavirus-related shutdowns
around the world, Sony sold 91 million software units — or games. That was a more than 82% year-on-year rise
, even as sales of consoles declined. Of the total number of games sold, 74% were from digital downloads, the highest number on record.

Meanwhile, Sony’s subscription service called PlayStation Plus, saw subscriber numbers reach 44.9
million in the April to June quarter, higher than 36.2 million in the same period last year.

These trends will help Sony’s earnings going forward, analysts said.

“Across the board if you look at games in particular, what was truly impressive was the strong
, over 80% growth in the digital content sales which drove strong profit growth both in the first quarter,
and I think will raise expectations for the full year,” Damian Thong, co-head of Asia technology research at Macquarie Capital Securities,
told CNBC’s “Squawk Box Asia.”