Market Overview

Game On: Zynga Reportedly Emerges As M&A Target

Share:
Game On: Zynga Reportedly Emerges As M&A Target
Related ZNGA
Analysts Weigh In On Zynga After Q3 Earnings Miss
Earnings Scheduled For October 31, 2018

Zynga, Inc. (NYSE: ZNGA) shares spiked Tuesday after a report that the company is a potential takeover target.

The Analyst:

Jefferies analyst Timothy O’Shea maintained a Buy on Zynga with a $5.25 price target. 

The Thesis:

Zynga has become a takeover target after drawing preliminary interest from other video game developers, according to a Bloomberg report.

O’Shea said Zynga is an attractive asset with a portfolio of valuable intellectual property plus significant development, publishing and analytics assets. (See his track record here.) 

“Management has successfully pivoted the company toward mobile gaming and recurring revenue, and with a 20-percent EBITDA margin in its sights (up from zero two years ago) the timing makes sense,” the analyst said. 

Potential buyers could be media, technology, gambling/casino or other rival gaming companies, but the talks sound preliminary, he said. 

Video games are the fastest growing form of media and mobile gaming is the fastest growing segment in video games, O'Shea said. The global mobile video game market is expected to grow 25 percent year-over-year to $70 billion in 2018, he said. 

“In today’s world, cross-platform play means that games like 'Fortnite' are available across console, PC and mobile. It makes sense game publishers would want to beef up their mobile development capacity." 

While Zynga management said in May that there isn’t a for-sale sign on the company, the company indicated that potential suitors are always welcome to approach the board.

Price Action:

Zynga shares were down 2.52 percent at $4.25 at the time of publication Wednesday. 

Related Links:

How Video Game Stocks Are Setting Up Ahead Of The Holiday Season

4 Reasons Why 'Fortnite' Has Won Over Gamers

Latest Ratings for ZNGA

DateFirmActionFromTo
Nov 2018Credit SuisseMaintainsUnderperformUnderperform
Nov 2018BarclaysMaintainsUnderweightUnderweight
Sep 2018Stifel NicolausInitiates Coverage OnBuy

View More Analyst Ratings for ZNGA
View the Latest Analyst Ratings

Posted-In: BloombergAnalyst Color News Price Target Reiteration M&A Analyst Ratings Media Best of Benzinga

 

Related Articles (ZNGA)

View Comments and Join the Discussion!

Latest Ratings

StockFirmActionPT
LXFTKeyBancDowngrades0.0
CPAImperial CapitalDowngrades68.0
PRMWImperial CapitalInitiates Coverage On18.0
TGTKeyBancInitiates Coverage On110.0
QCOMMorgan StanleyUpgrades0.0
View the Latest Analytics Ratings
Don't Miss Out!
Join Our Newsletter
Subscribe to:
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Fintech Focus
Your weekly roundup of hot topics in the exciting world of fintech.
Thank You
for registering for Benzinga’s newsletters and alerts.
• The Daily Analysts Ratings email will be received daily between 7am and 10am.
• The Market in 5 Minutes email will be received daily between 7am and 8am.
• The Fintech Focus email will be received every Friday between 2pm and 5pm.

CVS Is One Step Closer To Buying Aetna

AcelRx Shares React Positively To FDA Committee Briefing On Painkiller Candidate Dsuvia