Wedbush Comments on Zynga (ZNGA) Following Q2 Results

Wedbush maintained an Outperform rating on Zynga (NASDAQ: ZNGA) with a modified price target of $6.00 (from $7.00). Analyst Michael Pachter said FY bookings guidance appears reasonable.

"Over the first half of the year, Zynga has generated $336 million in bookings, and its Q2 performance puts it at a run rate of $686 million. We believe that industry growth should allow Zynga to grow revenues by $15 million per quarter sequentially for the foreseeable future, implying that without any new game releases, Zynga is positioned to generate $731 million in bookings for the year. The company announced two modest titles today (an NFL manager simulation and a Looney Tunes title) that are unlikely to generate significant revenues in the back half due to timing, but it appears Zynga is on track to release a handful of titles early next year," said Pachter.

"We think that the most compelling argument in the bear case was that its users continued to dwindle. Zynga reversed that trend in Q1, with metrics up in virtually every important user category, and continued to show improvement in Q2. Perhaps most impressive was the company’s growth in monthly unique payers, which grew to 1.7 million in Q2 compared to 1.4 million in Q1. Every other user metric was up q-o-q, demonstrating Zynga’s core games continue to perform well," he added.

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

Shares of Zynga closed at $2.92 yesterday.

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