Analysts Rave About Zynga's Q1; 'Game of Thrones' Game Launch Likely Coming In Q2

Zynga Inc ZNGA shares moved higher after the game developer reported first-quarter earnings Wednesday and raised 2019 sales guidance by $50 million.

Baird

Zynga’s first-quarter results largely confirm a successful turnaround and M&A strategy, improving organic growth outlook and less dependence on new game launches, analyst Colin Sebastian said in a Thursday note.

“Zynga’s portfolio is showing resilience despite strong competition, with additional platform growth opportunities ahead from Internet platforms/messaging apps/5G upgrades/streaming,” the analyst said.

Baird upgraded Zynga from Neutral to Outperform and raised the price target from $5 to $8.

Morgan Stanley

Zynga’s forward commentary speaks to how the company’s core franchises are moving from strength to strength, analyst Brian Nowak said in a Thursday note.

New live services offerings will continue to drive Zynga’s five forever franchises, and continued growth gives the company more gross profit dollars to invest in new IP development, the analyst said. The company is taking shareholder-friendly steps to optimize its asset portfolio and balance sheet, he said.

“We remain supportive of ZNGA's M&A strategy as it has shown a strong capability to integrate and improve its acquired companies … essentially positioning itself to be an even larger leading mobile game platform."

Morgan Stanley maintained an Overweight rating and raised its price target from $5.75 to $6.80.

Wedbush

Zygna is a compelling investment, and new acquisitions are not a drag on its emerging profitability, analyst Michael Pachter said in a Thursday note.

Wedbush maintained an Outperform rating and raised the price target from $6.40 to $7.50.

Bank Of America Merrill Lynch

Analyst Justin Post said he underestimated the benefit to Zynga’s model from acquisitions. Looking back, the company appears to have utilized its cash well, he said.

The stock is discounting some ongoing upside from acquired titles, the analyst said, adding that traction from new titles is a key driver ahead, with a "Game of Thrones" launch likely in the second quarter.

BofA maintained a Neutral rating and raised the price target from $5.50 to $6.50.

KeyBanc Capital Markets

First-quarter bookings and adjusted EBITDA were well above expectations, as recently acquired titles have integrated even better than KeyBanc anticipated, said analyst Evan Wingren.

The analyst continues to recommend buying Zynga on the potential for new games and capital allocation to create continued upside.

KeyBanc maintained an Overweight rating and raised the price target from $6.50 to $7.