Rosenblatt Reiterates Buy on NQ Mobile (NQ)

Rosenblatt analyst, Jun Zhang, thinks that NQ Mobile (NYSE: NQ) two announcements (buying a 22% FL Mobile stake and 20% NQ stake) should be viewed as a positive since the management team is trying to bundle their interests with investors. The analyst thinks shares are worth $13 based on a sum of parts valuation, including $8 per share net cash (after the FL Mobile deal), $4 per share ($350M valuation based on $20-25M net profits from Showself in 2016), and $1 per share valuation for other assets including mobile health, smart cars, wall paper, Chinese smartphone operating systems, etc. No change to Buy rating or $13 price target.

NQ’s chairman is paying RMB 440M for 11% of FL Mobile within the next two months to increase investors’ confidence level on this deal. The analyst believes that management buying stakes in FL Mobile and MBO would increase management’s incentives to both complete the deal as soon as possible and increase NQ’s stock price by delivering strong 2016 earnings results. Management incentives and the completion of the FL Mobile deal are more important than stock dilution and other factors.

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

Shares of NQ Mobile closed at $4.59 yesterday.

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