Needham & Company Cuts Estimates on Zynga (ZNGA); Visit to 'Missville'

July 26, 2012 9:46 AM EDT
Get Alerts ZNGA Hot Sheet
Price: $2.64 --0%

Rating Summary:
    8 Buy, 19 Hold, 3 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 7 | Down: 8 | New: 1
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Needham & Company maintains a 'Hold' on Zynga (NASDAQ: ZNGA).

Analyst, Sean McGowan, said, "ZNGA’s 2Q results were well below our expectations and consensus. Bookings rose 9.8% YoY to $301.6 mm, but were below our estimate ($353.6 mm) and consensus, and fell 8% QoQ. Non-GAAP EPS were $0.01, below our estimate of $0.06 and consensus of $0.05. Management attributed the disappointing results to weakness in legacy games, due in part to changes in Facebook’s (Nasdaq: FB) platform, the delayed release of The ‘Ville, and weaker than expected performance of Draw Something. Key user metrics were generally up YoY but there was some sequential weakness; MAUs rose 34% YoY to 306 mm, DAUs rose 23% YoY to 72 mm, but average daily booking per user (ABPU), a key metric decreased to $0.046 from $0.051 in Q1. Management slashed guidance; FY bookings are now expected to be $1.15B-$1.225B (down from $1.425B-$1.5B) with non-GAAP EPS of $0.04-$0.09 (down from $0.23-$0.29). We have cut our 2012 non-GAAP EPS estimate from $0.30 to $0.06, expecting breakeven EPS in the second half."

"We have reduced our EPS estimates as follows: 2012 now $0.06, down from $0.30; 2013 now $0.10, down from $0.40, and 2014 now $0.15, down from $0.50."

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

Shares of Zynga closed at $5.08 yesterday.

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