NEW YORK (TheStreet) -- Coverage of King Digital Entertainment (KING - Get Report) stock was initiated by Stern Agee with a "neutral" rating on Thursday.
Stern Agee noted the success of King's flagship game, Candy Crush Saga, while stating that the video game maker needed to diversify in the future -- including mobile platforms -- to build on its early success.
"With King's tent-pole title, Candy Crush Saga, which represented 78% of 4Q bookings, already tracking 20% below peak-booking levels reached in July 2013, the company's future growth will depend on its ability to diversify. Farm Heroes Saga, which released on the iOS/Android platforms in January, has been gaining momentum and could prove critical to growth. The key to the stock in the near term, will be the decay rate of Candy Crush and; growth in Farm Heroes Saga." Sterne Agee said.
King Digital had its initial public offering on Wednesday, setting its share price at $22.50. The stock closed down at $19 on its opening market day.
"Scenarios suggest KING shares could be valued in the range of $13 to $32 based on various growth assumptions for bookings and adjusted EBITDA, and based on a range of multiples," the note said.
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