Over the last trading session, shares of Zynga Inc. (ZNGA) were up slightly at $6.03 a share.
Year over year, the stock is now up 64% from a low of $3.68 in January 2019. That’s more than double the 29% gain on the Consumer Discretionary Selector SPDR Fund (XLY), and the S&P 500 gain of 29% year over year.
Zynga develops, markets, and operates social games as live services in the United States and internationally. The company’s games are played on mobile platforms, such as Apple iOS and Google’s Android operating systems, as well as on social networking sites, such as Facebook. It also provides advertising services comprising mobile and display ads, engagement ads and offers, and branded virtual items and sponsorships to advertising agencies and brokers; and licenses its own brands.
On Wednesday, February 5, 2020, the company will release its fourth quarter and full-year 2019 results. According to Forbes, it’s expected to post gross revenues of $1.55 billion, which would be 60% year over year growth thanks to new company titles and acquisitions. Adjusted EPS is expected to grow to 27 cents on higher sales.
As we’ve also reported, analysts are bullish on the stock heading into earnings.
For example, KeyBanc Capital Markets’ analysts Tyler Parker has a price target of $8.50 with an overweight rating. “Zynga’s biggest game franchises include Words With Friends, Zynga Poker, CSR Racing, Merge Dragons, and Empires & Puzzles. Parker writes that Zynga is “well-positioned to continue building a broad and scaled game portfolio that, when combined with expanding margins and further M&A potential, presents an attractive story going forward.”
Baird’s Colin Sebastian also notes like the stock thanks to its compelling games and pipeline.
In October 2019, the company posted better than expected earnings, achieving its best quarterly revenue numbers in its history.
In fact, for its third quarter, it saw record revenue of $345 million, which was up 48% year- over-year as a result of strong bookings growth offset by a significant increase in deferred revenue. Bookings also reached a new high of $395 million, beating its guidance by $15 million and up $146 million or 59% year-over-year, per its press release.
ZNGA also achieved record mobile revenue and bookings in the quarter with mobile revenue up 54% year-over-year and mobile bookings up 64% year-over-year. “Zynga has done a good job creating a portfolio of [internet enabled] live services,” Sebastian added. “It means that, with scale, it will lead to more profitability and more visibility.”
Ian Cooper’s Personal Position in ZNGA: None
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