Deutsche Bank Upgrades Shanda Games (GAME) to Buy; Compelling Valuation

Deutsche Bank upgraded Shanda Games (NASDAQ: GAME) to Buy with a price target of $6.41.

Deutsche analyst says, "Shanda Games trades at 5.7x 2011 P/E and 5.4x 2012 P/E, vs. a peer average of 10.6x 2011 P/E and 9.0x 2012 P/E. Net cash (US$544m) represents 39% of current market cap. Ex-cash, P/E for 2011 and 2012 is 3.5x and 3.3x, vs. a peer average of 7.0x and 5.8x. Current valuation is at a historical tough since its IPO in 2009. With the two legacy games, Mir 2 and Woool, consistently delivering solid results in the past several quarters, we believe concerns on game life cycle are overdone. We expect revenue growth to accelerate to c.25% in the next two quarters."

For more ratings news on Shanda Games click here and for the rating history of Shanda Games click here.

Shares of Shanda Games closed at $4.84 yesterday.

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