Market Overview

Zynga's Big Quarter: Analysts Speak Up

Zynga's Big Quarter: Analysts Speak Up

Zynga Inc (NASDAQ: ZNGA) stock jumped Thursday after the company reported better-than-expected fourth-quarter revenue growth and issued 2019 bookings guidance above consensus expectations. Zynga management said the company’s “turnaround is now complete” and it is positioned for “significant growth in 2019 and beyond.”

Several Wall Street analysts weighed in on Zynga’s quarter on Thursday.

Impressive Guidance

Acquired titles helped drive the impressive Q4 beat, said Bank of America Merrill Lynch analyst Justin Post.

“Margins have reached 20 percent, the title portfolio is more diversified and [the] Street will likely increasingly look forward to new title contributions in 2019 and 2020,” the analyst said. The new 2019 guidance suggests 39-percent bookings growth and 5-10-percent organic revenue growth, he said. 

KeyBanc Capital Markets analyst Evan Wingren said there are simply too many paths to success for Zynga for investors to ignore the opportunity.

“Initial FY19/FY20 guidance exceeded our expectations, driven by an increasingly diverse set of live services, with long-term potential of new franchises,” the analyst said. Zynga's guidance was particularly impressive given that management has historically taken a conservative approach to forecasting, he said. 

The Next Catalyst

Morgan Stanley analyst Brian Nowak said Zynga is building a mobile puzzles empire.

“ZNGA put up a strong quarter with positive forward commentary and its efforts to scale through M&A appear to be paying off, as it continues to grow the core while directing more resources to new IP development/marketing,” Nowak wrote. Key game launches in the second half of 2019 will be the next catalyst for the stock, he said. 

Ratings And Price Targets

  • Bank of America has a Neutral rating and raised the price target from $4.20 to $5.
  • Morgan Stanley has an Overweight rating and lifted the price target from $4.80 to $5.25.
  • KeyBanc has an Overweight rating and $5.50 target.

Related Links:

'Fortnite' Creator Turns $3B Profit In 2018: The Stocks That Benefit

Zynga, Take-Two Are Top Picks As Goldman Starts Coverage Of Video Game Developers

Photo courtesy of Zynga. 

Latest Ratings for ZNGA

Feb 2020Piper SandlerMaintainsOverweight
Jan 2020Morgan StanleyMaintainsOverweight
Jan 2020KeyBancInitiates Coverage OnOverweight

View More Analyst Ratings for ZNGA
View the Latest Analyst Ratings

Posted-In: Bank of America Merrill LynchAnalyst Color Earnings News Guidance Price Target Reiteration Analyst Ratings Best of Benzinga


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