Zynga: Citi Launches Coverage With Buy Rating, $12 Target# Stock
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Zynga: Citi Launches Coverage With Buy Rating, $12 Target
Citigroup analyst Neil Doshi this morning picked up coverage of social
gaming company Zynga with a Buy rating and $12 price target.
“Zynga is the leading developer of Social Games and has built strong moats
around its business: 292 million monthly average users, an intensive focus
around analytics of its games/players, and a proven track record of game
monetization,” the Citi analyst writes in a research note. “The stock has
been highly volatile since its IPO and is currently 20% below its IPO price,
largely driven by a material deceleration in its bookings growth.”
But he thinks bookings growth could be bottoming, and projects re-
acceleration in the 2012 second half, driven by several factors:
•The recent release of several “very strong titles,” including
CastleVille and Hidden Chronicles.
•The probability of a significantly larger game launch in 2012 than in
2011.
•The impact of a new direct ad sales force.
Citi projects profits of 27 cents a share this year, 37 cents in 2013 and 50
cents in 2014.
ZNGA shares this morning are up 3 cents, at $7.96.
Citigroup analyst Neil Doshi this morning picked up coverage of social
gaming company Zynga with a Buy rating and $12 price target.
“Zynga is the leading developer of Social Games and has built strong moats
around its business: 292 million monthly average users, an intensive focus
around analytics of its games/players, and a proven track record of game
monetization,” the Citi analyst writes in a research note. “The stock has
been highly volatile since its IPO and is currently 20% below its IPO price,
largely driven by a material deceleration in its bookings growth.”
But he thinks bookings growth could be bottoming, and projects re-
acceleration in the 2012 second half, driven by several factors:
•The recent release of several “very strong titles,” including
CastleVille and Hidden Chronicles.
•The probability of a significantly larger game launch in 2012 than in
2011.
•The impact of a new direct ad sales force.
Citi projects profits of 27 cents a share this year, 37 cents in 2013 and 50
cents in 2014.
ZNGA shares this morning are up 3 cents, at $7.96.
