Market Overview

Zynga's Q3 Outlook Could Prove To Be Overly Conservative

Share:
Zynga's Q3 Outlook Could Prove To Be Overly Conservative

Jefferies maintains its Buy on Zynga Inc (NASDAQ: ZNGA) after posted a solid quarter ahead of consensus, and said the company's third-quarter outlook "looks conservative" given the solid launch of "CSR Racing 2" game.

Earnings And Guidance

Zynga guided third-quarter bookings of $180 million–$190 million versus the Street's $188 million and non GAAP EPS of $0.01, which came in line with consensus.

"By year-end we believe user metrics (which have mostly stabilized) could begin to inflect upwards for the first time in years," analyst Brian Pitz wrote in a note.

Related Link: Gaming Sector Report Card: 2 Up, 1 Down, 2 To Report

"We note ZNGA does not need a breakout hit to drive growth and profitability and we continue to think the risk / reward looks attractive at these levels especially with $1.25 per share in cash, investments, and real estate," Pitz continued.

Game Catalysts

Among others, Pitz's bullish thesis is based on the solid performance of "CSR Racing 2" game, which reached No. 1 on Apple Inc. (NASDAQ: AAPL)'s U.S. App Store and has been consistently ranked as a top-20 "top grossing" app since launch.

"CSR 2's ads are not captured by the top grossing charts, which means CSR 2 is actually monetizing at higher levels than the App Store would indicate," Pitz highlighted.

During this holiday, Zynga will launch NaturalMotion's "console quality" "Dawn of Titans." Pitz also expects a Wizard of Oz themed match-three game, plus "FarmVille: Tropic Escape"also in the second half.

At time of writing, shares of Zynga were down 7.07 percent to $2.76, while the analyst has a price target of $5 on the stock.

Full ratings data available on Benzinga Pro.

Do you have ideas for articles/interviews you'd like to see more of on Benzinga? Please email feedback@benzinga.com with your best article ideas. One person will be randomly selected to win a $20 Amazon gift card!

Latest Ratings for ZNGA

DateFirmActionFromTo
Nov 2019MaintainsBuy
Sep 2019AssumesNeutral
Aug 2019MaintainsOutperform

View More Analyst Ratings for ZNGA
View the Latest Analyst Ratings

Posted-In: Analyst Color Earnings Long Ideas News Guidance Price Target Reiteration Analyst Ratings Best of Benzinga

 

Related Articles (AAPL + ZNGA)

View Comments and Join the Discussion!

U.S. Dollar Index Trading Higher, Consumer Credit Rise Eases

Jeff Immelt Wants To Change GE's Corporate Culture