Since 2020 began, shares of Zynga Inc. (NASDAQ: ZNGA) have run from a low of $6.15 to a current price of $6.82 a share. Year over year, the stock is now up 71%. That’s more than double the 29% gain on the Consumer Discretionary Selector SPDR Fund (XLY).
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.
Over the last few days, Baird analyst Colin Sebastian said he liked the ZNGA stock, pointing to its strong pipeline and current game franchises. “Zynga has done a good job creating a portfolio of [internet enabled] live services,” Sebastian said, as quoted by Barron’s. “It means that, with scale, it will lead to more profitability and more visibility.”
Sun Trust analyst Matthew Thornton assigned a buy rating on the stock with a $7.50 price target. He argues Zynga “provides pure-play exposure to the large and fast growing global mobile game market” with a growing and diversified game portfolio and “highly experienced management team and Board,” as quoted by The Street.
“In addition to a healthy existing portfolio, ZNGA has a strong pipeline (at least 7 games, including FarmVille, Harry Potter, Star Wars, Game of Thrones, and others) as well as a strong balance sheet (>$1.4b in cash) and acquisition track record (Small Giant, Gram Games) to augment organic growth with M&A in what is a highly fragmented market,” he added.
As we’ve noted, the company saw revenue of $345 million, up 48% year over year, with bookings up 59% to $395 million. Mobile revenue soared to $328 million, up 54% year over year with mobile bookings up 64% to $378 million.
Zynga also raised its full-year guidance to $1.28 billion in revenue, an increase of $42 million from prior guidance. The company also raised its booking guidance by 59% to $1.55 billion, which is an increase of $46 million over prior guidance.
Ian Cooper’s Personal Position in ZNGA: None
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