Sterne Agee Starts Zynga (ZNGA) at Underperform, $7 Price Target

You know the social-media IPO market is on fire (for better or worse) when firms are starting coverage on a stock which is not yet public.

An analyst at Sterne Agee initiated coverage on shares of Zynga (Nasdaq: ZNGA) with an Underperform rating and $7 price target Tuesday morning. Zynga will likely price its offering on Thursday, December 15th. The current offering range sits at $8.50-$10 per share.

The Sterne Agee analyst cited a decline in free cash flow, margins which are now under pressure and growth which is decelerating faster than previously expected. The analyst predicts the growth of Zynga's bookings will fall to 20 percent in 2012 and 17 percent in 2013. Last year, Zynga saw bookings surge 156 percent.

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