Zynga Gets A Fresh Start, Says Barclays

In a report published Thursday, Barclays analysts maintained an Equal-Weight rating on

, with a price target of $3, after the company reported better-than-expected 1Q results. Zynga reported its 1Q bookings and EBITDA handsomely ahead of the Barclays estimates. The analysts believe that the changes being undertaken at the company are "for the better." The company's cost cutting program could yield $100M in annual savings. While workforce reduction could yield benefits "rather quickly," the positive impact from the centralization of service costs may not bear fruit until 3Q16. In the report Barclays noted, "…founder Mark Pincus, 1 month into his return as CEO, outlined a strategy that will narrow Zynga's focus to 5 key genres and reduce the pipeline to 6-8 games this year. Rather than haphazardly taking "more shots on goal" in multiple genres, we think Zynga is wise to rationalize its pipeline, especially as it right-sizes the workforce." The EPS estimates for 2015 and 2016 have been raised from -$0.08 to -$0.02 and from -$0.07 to -$0.01, respectively. "The cost reduction efforts are certainly encouraging, but for ZNGA shares to sustainably re-rate higher, we believe the pipeline will need to deliver – still difficult to predict with much accuracy, in our view," the analysts added.