• King Digital Entertainment PLC (NYSE: KING) shares are down 15 percent in the past month, even after hitting a peak of $16.10 on August 11.
• Pacific Crest’s Evan Wilson maintained a Sector Weight rating on the company.
• Although Candy Crush Jelly Saga could be launched earlier than expected, Wilson believes that the company needs a non-Candy Crush hit to sustain growth over the long-term.

Analyst Evan Wilson mentioned that King Digital has launched a test for its next Candy Crush game, known as Candy Crush Jelly Saga. This next iteration of Candy Crush franchise is currently available only in Thailand on Google Play. The full launch and monetization of Jelly Saga could begin in early 1Q16, Wilson added.

“Another Candy Crush title would be earlier than expected and likely will be received positively by the Street in the near term,” Wilson wrote.

Although the launch of the Candy Crush sister title is likely to have a positive impact in the near term, there is expected to be very little material leverage to the company’s profitability, Wilson believes.

“It could slow the revenue decline from Candy Crush, but having three similar games for a similar group of players is likely to lead to lower margins for the franchise. We still think that King needs a new, big game before its shares will work materially higher,” the Pacific Crest report stated.

Wilson believes that King Digital faces the same risks as other videogame companies and needs to develop another hit to sustain growth.