Stifel Says Wall Street is Not Getting Zynga's (ZNGA) Story, Starts at Buy

Shares of Zynga (Nasdaq: ZNGA) are continuing lower Wednesday, extending a nearly 5 percent drop in the stock on Tuesday as traders "sold the news" following the company's "Unleashed" event in San Francisco. Positive comments and a new Buy rating from Stifel Nicolaus' Jordan Rohan earlier are not helping this morning.

Rohan said Zynga could provide strategic buyers such as Google (Nasdaq: GOOG) or Microsoft (Nasdaq: MSFT) a foothold in the all-important social media sector. The analyst believes the stock price does not reflect the company's competitive advantage. In addition to its position with Facebook (Nasdaq: FB), the popularity of Zynga's games allow the company to develop games more quickly and at a more profitable clip than peers.

Amid recent concerns related to declining daily active users, Rohan said he continues to expect sales contributions from Zynga's hits like CityVille, Zynga Poker and FarmVille.

The Stifel analyst set an $8.50 price target on shares of Zynga. With the stock down 0.4 percent to $5.74 at last check, Rohan's new target represents potential upside of about 48 percent.

Track all the market-moving analyst calls on shares of Zynga with our Analyst Ratings page.

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