Zynga Inc (ZNGA)

[Trevor11]

ZNGA: HEADING HIGHER, 76 PERCENT UPSIDE POTENTIAL, ZYNGA IS STILL CHEAP COMPARED TO ITS PEERS,







BOOKING GROWTH WAS IMPRESSIVE LAST QUARTER


THE USERS WENT FROM 19 MILLION LAST Q1 TO 21 MILLION THIS Q1


THE MOST IMPORTANT STORY IS THAT ZYNGA FINALLY REVERSED THE DRIP IN DAUS.


THE Q2 GUIDANCE FOR BOOKINGS HITTING $205 MILLION IS ACTUALLY THE HIGHEST BOOKINGS TOTAL BY FAR





ZYNGA: HEADING HIGHER

May. 9.17 | About: Zynga (ZNGA)

STONE FOX CAPITAL

(7,379 followers)

Summary
ZYNGA REPORTED A STRONG Q1.
THE BOOKINGS GUIDANCE FOR Q2 IS EXCEPTIONAL CONSIDERING THE HISTORY OF LOW BALLING NUMBERS.
THE STOCK REMAINS CHEAP COMPARED TO PEERS EVEN AFTER THE RECENT RALLY.

Zynga (NASDAQ:ZNGA) has surged to multi-year highs after finally delivering bookings growth. The game developer is now mostly focused on mobile and is finally benefiting from the predicted end of the impact from declines in web revenue.
The stock now trades around $3.30 with a market cap of $2.9 billion. The question is whether Zynga has more upside after a disappointing five years as a public company.

ZNGA data by YCharts
Maybe THE MOST IMPORTANT STORY IS THAT ZYNGA FINALLY REVERSED THE DRIP IN DAUS. THE USERS WENT FROM 19 MILLION LAST Q1 TO 21 MILLION THIS Q1. No matter how well the paying metrics have improved, the loss of users each and every quarter was holding back bookings growth.
For this reason, BOOKING GROWTH WAS IMPRESSIVE LAST QUARTER without a real major hit. My previous article again highlighted how Zynga didn't need a hit game in order for breakout numbers.
The dips in web revenue such as from the Facebook (NASDAQ:) platform was a prime reason for this bullish thesis. IF ZYNGA WAS JUST A MOBILE-GAME DEVELOPER, THE COMPANY WOULD'VE GENERATED A 27% SURGE IN BOOKINGS LAST QUARTER.
FOR Q1, MOBILE BOOKINGS ACCOUNTED FOR 85% OF THE $207 MILLION in quarterly bookings. Web bookings were down to only $31 million in the quarter.

THE KEY TO THIS STORY IS THAT WEB BOOKINGS WERE $35 MILLION IN Q4 AND $43 MILLION LAST Q1. THE BOOKINGS DIPS OF A FEW MILLION PER QUARTER ARE EASILY ABSORBED BY THE GROWTH IN MOBILE.
THE Q2 GUIDANCE FOR BOOKINGS HITTING $205 MILLION IS ACTUALLY THE HIGHEST BOOKINGS TOTAL BY FAR, as the company only guided to $190 million in the prior quarters. Going back two years in my previous work, ZYNGA TYPICALLY BEATS BOOKINGS GUIDANCE BY AT LEAST $10 MILLION, PLACING THE REAL GUIDANCE AT $215+ MILLION AND SOME $40 MILLION ABOVE THE REPORTED $175 MILLION LAST Q2.

How much would the market pay for a stock growing mobile-game bookings by 23%? Zynga only has an Enterprise Value of about $2.2 billion considering the large cash balance in excess of $700 million.
As a comparison, Electronic Arts (NASDAQ:EA) trades at roughly double the EV to Revenues multiple of Zynga without the same growth rate potential as revenues reach $5 billion. Analysts only forecast 5.5% revenue growth in Q2.

ZNGA EV to Revenues (Forward) data by YCharts
The key investor takeaway is that Zynga needs to generate more strong quarters to realize the multiple of Electronic Arts. THE STOCK, THOUGH, HEADS HIGHER on the backs of the return to bookings growth with or without a big hit game.

Disclosure: I am/we are long ZNGA.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Additional disclosure: The information contained herein is for informational purposes only. Nothing in this article should be taken as a solicitation to purchase or sell securities. Before buying or selling any stock you should do your own research and reach your own conclusion or consult a financial advisor. Investing includes risks, including loss of principal.



Source:

https://seekingalpha.com/article/4071206-zynga-heading-higher






GLOBAL UPDATES

ZYNGA INC (NASDAQ:ZNGA) HAS 76 PERCENT UPSIDE POTENTIAL

CHARLIZE BRADLEY
5 DAYS AGO

Zynga Inc (NASDAQ:ZNGA) shares traded -2.07% during the most recent session the stock exchanged hands 11.87M shares versus average trading capacity of 7.48M shares, yielding a market cap of $2.46B. Wall Street analysts covering the stock are projecting that the stock will reach $3.32 within the next 52-weeks. The mean target projections are based on 13 opinions, the mean target was last revised on 05/01/17.
Taking a broader look brokerage firms’ analysts on the street with an expectant view have Zynga Inc (NASDAQ:ZNGA) high price target of $5.00 and with a conservative view have low price target of $2.70 with a standard deviation of $0.85. If seeing target price from optimistic overview then it has 76 percent upside potential from the latest closing price of $11.87.
Zynga Inc (NASDAQ:ZNGA) “Resumed” by Pacific Crest in a research note issued to investors on Apr-26-17 as Sector Weight.
Additionally on Dec-23-16 Zynga Inc (NASDAQ:ZNGA) was “Initiated” by Mizuho as Buy at $3.50 and on May-05-16 the stock was “Reiterated” by UBS as Buy from $3 to $3.30. Furthermore on May-05-16 the stock was “Reiterated” by The Benchmark Company as Buy from $3.18 to $3.22.
On the other hand the company has Relative Strength Index (RSI 14) of 51.96 along with Average True Range (ATR 14) of 0.07, Consequently Zynga Inc (NASDAQ:ZNGA) weekly and monthly volatility is 3.32%, 2.38% respectively. The company’s beta value is at 1.00.
In terms of Buy, Sell or Hold recommendations, Zynga Inc (NASDAQ:ZNGA) has analysts’ mean recommendation of 2.60. This is according to a simplified 1 to 5 scale where 1 represents a Strong Buy and 5 a Strong Sell.
Analysts who have weighed in on projected earnings growth are expecting that Zynga Inc (NASDAQ:ZNGA) will report earnings of $0.02 for the current quarter, however the company’s high EPS estimates are $0.03.
Previously Zynga Inc (NASDAQ:ZNGA) reported -$0.01 earnings per share (EPS) for the quarter on 5/4/2017 After Market Close, meeting the consensus estimate of -$0.01 by $0.00. The company posted an earnings surprise of 0.00%.
While considering growth estimates of the company, it has next year growth estimates of 28.60% whereas during current year it has 133.30% estimations over growth. Past 5 years growth of Zynga Inc (NASDAQ:ZNGA) observed at -30.06%, looking forward for the next 5 years it has a strong prediction of 30.00% over growth.
Zynga Inc (NASDAQ:ZNGA) revenue estimates for the current quarter are $196.08M according to 15 number of analysts, for the current quarter the company has high revenue estimates of $226.7M in contradiction of low revenue estimates of $184.9M. For the current year the company’s revenue estimates are $865.98M compared to low analyst estimates of $785.66M and high estimates of $1B according to 13 number of analysts.
Currently Zynga Inc (NASDAQ:ZNGA) shares owned by insiders are 0.50%, whereas shares owned by institutional owners are 75.70%. However the six-month change in the insider ownership was recorded -11.17%, as well as three-month change in the institutional ownership was recorded -6.08%.
Zynga Inc (NASDAQ:ZNGA) trading -7.79% away from its 52 week high of $3.08 and +25.11% far from the stock’s low point over the past 52 weeks, which was $2.27. The stock hit its 52-week high on 12/08/16, and 52-week low on 06/27/16. The company’s trailing twelve month income is -108.20M dollars.
Zynga Inc (NASDAQ:ZNGA) trailing twelve month revenues are $741.40M, whereas its price to sales ratio for the same period is 3.27. Its book value per share for the most recent quarter is $1.78 while its price to book ratio for the same period is 1.60, as for as the company’s cash per share for the most recent quarter is $1.00, however its price to cash per share ratio for the same period is 2.84. The stock has a current PEG ratio of 1.38 where as its trailing twelve month P/E ratio is -23.08.


Source:

https://expertgazette.com/2017/05/05/zynga-inc-nasdaqznga-has-76-percent-upside-potential/