Market Overview

Bank Of America: Zynga's Outlook Keeps Sentiments In Check Despite Earnings Beat

Share:
Bank Of America: Zynga's Outlook Keeps Sentiments In Check Despite Earnings Beat

Although Zynga Inc (NASDAQ: ZNGA) reported third-quarter results ahead of expectations, the 2020 outlook reflected lower margins, which kept the stock’s uptrend in check, according to Bank of America.

The Analyst

BofA’s Ryan Gee maintained a Neutral rating on Zynga, reducing the price target from $6.70 to $6.60.

The Thesis

Zynga’s third-quarter bookings were around 3% higher than the Street expectations, driven mainly by Empires & Puzzles and Merge, while EBITDA was about 17% higher, Gee said in the note.

The company guided to fourth-quarter bookings 5% above the consensus estimate and its EBITDA guidance was also 17% better than expected.

Although Zynga maintained its outlook for low double-digit bookings growth in 2020, it projected a year-on-year decline in EBITDA margins, the analyst said.

The company’s outlook implies EBITDA of around $305 million in 2020, versus consensus expectations of $343 million, Gee noted. He further wrote, “We think the revised margin outlook for 2020 will likely keep a lid on estimates and overshadows what was otherwise a positive print.”

The analyst said, however, that margin expansion may not matter if the company’s top-line continues to grow.

Price Action

Shares of Zynga were down 0.48% to $6.18 at the time of publishing on Thursday.

Related Link:

15 Most Popular Stocks Under $10, According To Robinhood Users

Latest Ratings for ZNGA

DateFirmActionFromTo
Nov 2020Piper SandlerMaintainsOverweight
Oct 2020Morgan StanleyMaintainsOverweight
Sep 2020MKM PartnersInitiates Coverage OnBuy

View More Analyst Ratings for ZNGA
View the Latest Analyst Ratings

 

Related Articles (ZNGA)

View Comments and Join the Discussion!

Posted-In: Bank of America Ryan GeeAnalyst Color Earnings News Price Target Analyst Ratings Tech Best of Benzinga

Latest Ratings

StockFirmActionPT
LQDAWedbushDowngrades4.0
NBHCDA DavidsonDowngrades
INTUCredit SuisseMaintains385.0
ROSTCredit SuisseMaintains126.0
WDAYCredit SuisseMaintains230.0
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