Bank Of America Reviews King Digital's Earnings

In a report published Friday, BofA Merrill Lynch maintained a Neutral rating on

, while the price objective has been reduced from $19 to $17, despite the company reporting robust 1Q results. The company reported better-than-expected 1Q results, with bookings of $604mn and adjusted revenue of $570mn. The beat was driven by sequential growth in Soda Saga in a seasonally strong quarter. "Growing payers q/q is a nice positive and expanding to new genres (mid-core, resource management) could accelerate this trend in 2H15," the analysts said. King Digital's results would be down sequentially in 2Q due to seasonality, currency headwind and lack of new titles. The company guided to 2Q bookings of $505mn at the midpoint, representing a 16 percent q/q decline. "Whether bookings grow q/q in 3Q will depend on traction/timing of 2Q titles incl. Alphabetty Saga and Paradise Bay, but King does expect a return to q/q growth in 4Q as new 2Q/3Q titles ramp," the analysts wrote. The EPS estimates for 2015, 2016 and 2017 have been reduced from $2.02 to $1.94, from $2.00 to $1.85 and from $2.01 to $1.75, respectively.