BofA Upgrades Zynga On Accelerating Ad Strategy: What You Need To Know
The Chartboost acquisition has positioned Zynga Inc (NASDAQ:ZNGA) for a “strategic pivot” toward higher growth and higher margin advertisement technology much sooner than was expected, according to BofA Securities.
The Zynga Analyst: Ryan Gee upgraded Zynga from Neutral to Buy and raised the price target from $12 to $13.50.
The Zynga Thesis: A strategic move from publisher to platform has significantly boosted the value of Zynga's network, Gee said in the upgrade note.
“Strong 1Q results, sustainable double-digit organic growth, increasing Intl. reach, and multiple cross-platform titles in development underpin our view ZNGA is in a better position now than at any point in its history on mobile,” the analyst said.
“Chartboost and Rollic’s impact on acquisition exhibit platform-like qualities that warrant a gradual multiple re-rating above game publishers toward ad-tech peers.”
This move has several immediate and long-term benefits, including cost savings “as ZNGA drives UA-spend through its own network,” new revenues via third-party app monetization and distribution, and the combination of first-party and third-party data “enhances the value of ZNGA’s own platform making it more attractive as an ad partner and/or potential acquirer,” Gee said.
ZNGA Price Action: Shares of Zynga were up 3.11% to $10.46 at the time of publication Thursday.
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