Deutsche Bank Starts Changyou.com (CYOU) at Buy
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Deutsche Bank initiates coverage on Changyou.com (NASDAQ: CYOU) with a Buy rating and a price target of $31.70, implying upside of 29%. Analyst Han Joon Kim noted that Changyou.com will release a new mobile TLBB title through Tencent.
"We expect Changyou to reverse the slide in its business with the imminent launch of its new mobile game, Legacy TLBB. Between Tencent's track record of supporting successful mobile conversions of legacy PC titles for other companies and 75% of Changyou's market cap supported by cash and land value, we see a disproportionately high risk to the upside," said Kim.
The analyst added, "As we elaborate in our September 2016 FITT report, 'Fattening the long tail', we see room for continued growth in mobile gamers into 2017. We identify Changyou as a potentially winning returning entrant to mobile, winning over new (or dormant PC) users with a refreshed version of its core intellectual property, Tian Long Ba Bu (TLBB). With Tencent as its publisher for Legacy TLBB, we expect the title to launch in mid-4Q16. Tencent has helped other PCturned-mobile games launch successfully in China, including Shanda’s Legend of Mir 2 and Giant’s Zhengtu."
Shares of Changyou.com closed at $25.02 yesterday.
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