UPDATE: Barclays Lowers PT on Shanda Games Following Mixed 2Q13 Results

In a report published Friday, Barclays analyst William Huang reiterated an Underweight rating on

, but lowered the price target from $5.00 to $3.50. In the report, Barclays noted, “We maintain our Underweight rating and lower our 12-month price target to US$3.5 (from US$5.0 previously). Shanda Games delivered mixed results in 2Q13 with the top line coming in below our expectation as a result of a sequential revenue decline from the ‘Million Arthur' game in Korea. It is disappointing that purchasing of in-game virtual items has declined after only 3-4 months of the game's operation in Korea. Shanda guided mobile game revenues to grow 50% q/q in 3Q13 mainly due to the contribution from Million Arthur in China offsetting monetization slowdown in Korea. We are cautious on the game's potential lifecycle and monetization sustainability in the China market in the next few quarters. In light of the continued slowdown of legacy core games in 2Q, we remain concerned that the recent ramp of mobile game revenues may not be enough to offset the declining trend for the company's MMO games business. Our new PT of US$3.5 is based on 4.0x (down from 5.0x) our 2014E non-GAAP EPADS of US$0.89 (lowered from US$0.99 before). ith this note, we transfer primary coverage of Shanda Games to William Huang.” Shanda Games Limited closed on Thursday at $4.07.