UPDATE: Bank of America Upgrades Zynga to Buy on Asset Value, Mobile Stabilization

Bank of America upgraded Zynga

from Underperform to Buy and raised the price target from $2.70 to $3.40. Bank of America commented, "While our upgrade could be early with bookings expected to decline q/q in 1Q, and our below-Street 2013 estimates, we are upgrading ZNGA to Buy due to the following: 1) valuation now reflects downside risk to bookings with $2.20/share in cash/assets, a $200mn/yr. poker business, and $150-200mn mobile business likely supporting the stock; 2) ZNGA's mobile trends may have stabilized (per comScore user data), and for PC there is option value for an inflection in players in 2013 driven by new categories (gambling and core); 3) recent 60-day performance of ANGI, FB, GRPN, and P suggest investors' risk tolerance with developing business models has increased; and, 4) FB's 10-K disclosure suggests $15-25mn upside to 4Q guidance & our prior bookings estimate." Zynga closed at $2.56 on Monday.