Market Overview

Wedbush's Pachter Downgrades King Digital

Share:
  • King Digital Entertainment PLC (NYSE: KING) shares have gained 16 percent year-to-date, even after hitting a low of $12.72 on August 24.
  • Wedbush's Michael Pachter downgraded the rating on the company from Outperform to Neutral, while maintaining the price target at $18.
  • King Digital’s shares are now trading close to the deal price, as the company approaches acquisition and slows the decline in bookings, Pachter mentioned.

King Digital reported its 3Q results ahead of expectations, with bookings of $502 million, as compared to the Wedbush estimate of $490 million estimate and its guidance of $460-$485 million. Adjusted EBITDA came in at $180 million, higher than the Wedbush estimate of $173 million and the consensus expectation of $161 million.

King Digital guided to Q4 bookings of $475-$500 million. Analyst Michael Pachter wrote, “Based on King’s brief history, it appears to us that the company is intent upon exceeding the high end of guidance, suggesting that Q4 bookings will be sequentially flat.”

Although the company has not given EBITDA guidance, the stable bookings outlook reflects “a high likelihood that King’s overall profitability is stabilizing as well,” Pachter said.

King Digital recently launched two new games, and is scheduled to launch another two games in 2016. “We expect King’s foray into the world of mid-core player vs. player games to yield positive results,” the analyst commented.

Activision Blizzard, Inc. (NASDAQ: ATVI) has agreed to acquire King Digital for $18 per share in an all-cash deal. Once the acquisition has been completed King Digital will operate as a division within the Activision umbrella.

“Given the company’s pending acquisition by Activision Blizzard at our target price, shares are unlikely to appreciate significantly,” Pachter added.

Latest Ratings for KING

DateFirmActionFromTo
Nov 2015Morgan StanleyDowngradesOverweightEqual-Weight
Nov 2015Cowen & Co.DowngradesOutperformMarket Perform
Nov 2015WedbushDowngradesOutperformNeutral

View More Analyst Ratings for KING
View the Latest Analyst Ratings

 

Related Articles (ATVI + KING)

View Comments and Join the Discussion!

Posted-In: Michael Pachter Vetr WedbushAnalyst Color Downgrades Analyst Ratings

Latest Ratings

StockFirmActionPT
FITBMorgan StanleyMaintains39.0
CHGGMorgan StanleyMaintains105.0
CGMorgan StanleyMaintains38.0
BXMorgan StanleyMaintains78.0
APOMorgan StanleyMaintains55.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com