Stifel Keeps Zynga (ZNGA) on Select List, PT Raised to $14

Stifel analyst Drew E. Crum raised the price target on Zynga (NASDAQ: ZNGA) to $14.00 (from $13.00) while maintaining a Buy rating after the company reported 4Q results that came in ahead of expectations, continuing a theme of healthy engagement across mobile gaming during the period. Contributions from recently acquired Peak, gains for select Forever Franchises, and a fast start for Harry Potter Puzzles & Spells, drove 50%+ user pay booking growth, and "stronger-than-anticipated" results from Rollic were additive to ad bookings (+47%).

The analyst stated "ZNGA trades at 17.8x '22E AEBITDA, which is above its historical averages on forward estimates (mid-teens range). But we'd argue a premium multiple here is warranted, given solid execution, our expectations for strong growth and margin expansion during the next several periods, and a favorable industry outlook. Accordingly, we continue to recommend purchase of ZNGA (currently a Stifel Select List idea) with a target price objective of $14/ share, which is based on a blended methodology (and described in detail below)."

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