Zynga Inc. (NASDAQ: ZNGA) shares, which have had a rough time lately, are surging in trading today after Goldman Sachs’s Heath Terry maintained a Buy rating on the company’s stock. Terry also reiterated a price target of $13 on ZNGA shares.
ZNGA shares rose to an intra-day high of $5.59 in trading today. At last check, the stock was trading 9.45% higher at $5.50 on volume of 24.12 million. Despite the gains in trading today, ZNGA is down more than 9% this week.
Terry said that ZNGA’s shares do not reflect the company’s growth prospects. His bullish call comes a few days after Cowen & Co’s Doug Creutz said that Facebook Inc. (NASDAQ: FB) users’ move to mobile phone consumption of content threatens ZNGA’s expansion in the number of games it serves.
But another analyst, Scott Devitt of Morgan Stanley, argues that the debate over daily average users for ZNGA games presumes too much about how that affects the company’s actual bookings.
Goldman’s Terry, meanwhile, notes that the data on users people are examining comes from AppData. However, this data paints a false picture of Zynga’s growth. Terry said that in the second quarter to date, daily average users are up 4% sequentially and 13% year-over-year, with the much of the growth in users and revenue coming from mobile, which AppData largely fails to measure.
Terry expects ZNGA shares to enjoy some “catalysts” from the next quarterly earnings report, as well as from ZNGA’s scheduled launch of new game titles.
Recent Comments