Wedbush: Zynga's Upside Potential Makes It A Top Play

Online video game developer Zynga Inc ZNGA has the potential to show notable upside versus the Street's estimates through 2021, according to Wedbush.

The Analyst

Michael Pachter maintained an Outperform rating on Zynga  with an unchanged $9 price target. Pachter also added Zynga's stock to the research firm's "Best Ideas List."

The Thesis

Zynga's two key title games "Empires & Puzzles" and "Merge Dragons!" — along with three new releases later this year — should help the company beat expectations over the coming years, Pachter said in a Tuesday note. (See his track record here.) 

"We expect the shares to trade closer to our price target over the remainder of the year," the analyst said. 

Pachter's inclusion of Zynga as a top pick follows a bullish research note at the beginning of August. The analyst lifted his price target on Zynga's stock to $9 at that time in reaction to the company's 14th consecutive quarter of sequential adjusted EBITDA growth in the second quarter.

Zynga's third-quarter guidance, which was mostly in-line with expectations, could prove to be conservative ahead of new game launches, according to Wedbush. 

Price Action

Zynga shares were up 2.68% at $5.75 at the time of publication Tuesday. 

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