Zynga's 2020 Guidance Appears Conservative, KeyBanc Says

Zynga Inc ZNGA has guided to 2020 bookings of $1.75 billion, which implies merely 6% growth excluding new games, according to KeyBanc Capital Markets.

The Zynga Analyst

Tyler Parker maintained an Overweight rating for Zynga with a price target of $18.50.

The Zynga Thesis

Zynga’s guidance for bookings growth appears conservative and the company has beaten initial guidance over the past three years, Parker said in the note.

Assuming live services generates the lion’s share of growth in 2020, with a contribution of only 5% coming from new games, the guidance seems conservative, given that Farmville 3, Puzzle Combat and Harry Potter are scheduled to be launched in the back half of 2020, the analyst said.

Excluding new games, the guidance implies only 6% growth in core games. This is conservative in view of the ongoing momentum with the Empires & Puzzles and Merge franchises, Parker said. He added that, even if Poker, Words with Friends and CSR do not generate any growth, growth in franchises other Empires & Puzzles and Merge will lend upside to the estimates.

Noting that the current consensus estimate is set marginally higher than the guidance, Parker raised his 2020 bookings estimate from $1.76 billion to $1.78 billion.

ZNGA Price Action

Shares of Zynga were down 1.75% to $7.00 at time of publication.

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