Buy Glu Mobile (GLUU) Into Q1 Results - Northland Capital Markets

April 15, 2014 8:56 AM EDT
Get Alerts GLUU Hot Sheet
Price: $2.03 +1.50%

Rating Summary:
    7 Buy, 7 Hold, 0 Sell

Rating Trend: Down Down

Today's Overall Ratings:
    Up: 17 | Down: 27 | New: 7
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Northland Capital Markets analyst Darren Aftahi is out reiterated an Outperform rating and $7.50 price target on Glu Mobile (NASDAQ: GLUU) saying he expects solid results and would recommend accumulating shares on the recent dip.

Aftahi highlights:

  • Our proprietary games analysis suggests upside to our 1Q non-GAAP smart phone revenue estimate of $38.6M, and management's overall revenue guidance of $38-$40M, driven by continued DH14 outperformance.
  • Based on current DH14 rankings, we also believe that the company’s FY14 DH14 guidance of “less than 20% of total non-GAAP revenue” (implying ~$29.2M (or less) at the midpoint of guidance) may prove conservative.
  • In short, DH14 has remained a top ~20-30 grossing game, and has more or less stabilized in this area. We note, its grossing rankings were roughly similar beginning 1Q as they were ending the Q.
  • Perhaps overlooked, DH14’s game download rank has also stayed fairly steady at ~20-30 on both Apple (iPhone/iPad) and Android since late January. We believe this bodes well for advertising-related revenue, which bounced back to ~21% of total sales last Q.
  • We estimate new games generated ~$8-9M in the Q (EW3, FLC 2, Motocross Meltdown, and Robocop)

Significant pullback in stock creates opportunity. Shares of GLUU have pulled back ~33% and now trade at ~2.0 EV/’14E sales. We would use this weakness to accumulate as we believe the fundamental story is intact.

For an analyst ratings summary and ratings history on Glu Mobile click here. For more ratings news on Glu Mobile click here.

Shares of Glu Mobile closed at $3.88 yesterday.

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