Benchmark Downgrades Glu Mobile (GLUU) to Hold

Benchmark downgraded Glu Mobile (NASDAQ: GLUU) from Buy to Hold with a price target of $6.74 (from $7.93) following Q2 results that mildly beat the Street. The downgrade comes amid de-acceleration for the Kim Kardashian game and dilution related to the Cie acquisition.

Analyst Mike Hickey said, "We have reduced our rating on the Company's shares from Buy to Hold, given the de-acceleration management anticipates from Kim in fiscal 'Q4 and the share dilution related to the Cie acquisition. We view the Company's risk / reward valuation profile balancing neutral (reduced from positive); acknowledging positive trends in mobile gaming market and the potential for continued upside versus expectations, offset by a meaningful valuation increase, a large acquisition within an arguably saturated racing category, management's expectation for Kim's performance to fade and less profitability upside than originally expected (related to the Royalty paid to Kim). As long as Kim's stardom on mobile ranking charts continues, we anticipate speculative investors will hang on for the ride, but a slip on the runway will likely create valuation pressure over rationalized performance expectations and the necessity for the Company to generate the next big hit."

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

Shares of Glu Mobile closed at $6.90 yesterday.

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