Glu Mobile Trading up 16% on Needham Initiation

Shares of Glu Mobile

have surged 16% during Friday's trading session after analysts at Needham initiated the stock with a "Strong Buy" rating and an $8 price target. The analyst wrote, “We believe GLUU's smart phone growth has been hidden in recent years by the decline of its feature phone revenue, but its new model is based on owned-IP, which is far more profitable,” he writes. “As the global installed base of smart phones and tablets grows and GLUU's low-margin feature phone revenues burn off, we expect significant gains in profitability. Our $8 price target assumes that at this time next year, the stock will sell at a P/E of about 20x non-GAAP EPS for 2014, which we estimate at 40 cents.” The move in GLUU has come on extremely heavy volume as more than 10 million shares have already traded hands compared to a 3-month daily average of 1.6 million. Glu Mobile Inc. (Glu) designs, markets and sells mobile games. The Company has developed and published a portfolio of casual and traditional games for a cross section of the users of smartphones and tablet devices who purchase its games through direct-to-consumer digital storefronts, as well as users of feature phones served by wireless carriers and other distributors.