Goldman Sachs Reiterates Neutral Rating, $28 PT for Changyou.com

In a company update released earlier today, the Goldman Sachs Group, Inc. reiterated its Neutral rating and $28 price target for Changyou.com Limited CYOU, related to the company's recent announcement of six new games it has in development. Goldman Sachs said in the report “We do not expect near-term revenue contribution from these games, since they will enter testing earliest by the end of 2012, according to QQ.com. The pipeline seems to constitute part of Changyou's platform strategy, discussed since 4Q11, to offer a more diversified offering. We view the emphasis on action and first-person shooter genres as recognition of Chinese gamer appetites for such games, following the success of Cross Fire (launched by Tencent in 2008). We think these games, which tend to have shorter game-play sessions and lower ARPU but higher paying conversion rates than traditional MMORPGs, could be an increasing growth driver of China's online game industry.” Changyou.com Limited closed at $27.89 on Friday.