Goldman Sachs Downgrades Zynga (ZNGA) to Neutral

July 26, 2012 7:18 AM EDT Send to a Friend
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Price: $2.43 --0%

Rating Summary:
    3 Buy, 22 Hold, 3 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 0 | Down: 0 | New: 5
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Goldman Sachs downgraded Zynga (NASDAQ: ZNGA) from Buy to Neutral with a price target of $4.00 (from $13.00), following disappointing Q2 results and guidance after the close.

The firm notes Q2 bookings of $302 mn was well below the consensus and their forecast of $343 mn/ $344 mn on lower than expected revenue per unique users. Adj.
EBITDA was $65 mn, well below their forecast/consensus of $89 mn/ $91 mn.

"The company lowered 2H guidance due to faster than expected declines in users on its most profitable games, partly due to the transition to mobile on the Facebook platform, delays in new title development, and changes to Facebook’s method for promoting games," the firm notes.

Revenue estimate for 2012 falls to $1,188 mn and non-GAAP EPS to $0.07 from $1,356 mn and $0.29, while 2013 falls from $1,713 mn and $0.43 to $1,269 mn and $0.09 and 2014 falls from $2,223 mn and $0.57 to $1,498 mn and $0.12.

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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