Following the earnings call and the guidance, analysts were positive on the company, as the focus shifts to the back half of 2014. Several analysts raised their price targets following the results. Here's what a few of them had to say.
Canaccord Genuity analyst Michael Graham (Hold, $5 PT)
Amidst a backdrop marked by pockets of business pressure, Zynga reported another in a string of quarters with solid execution relative to guidance. Bookings grew sequentially for the first time in 5 quarters despite major shrinkage from Farmville. We believe management deserves high marks for stabilizing the business; while investor focus will quickly shift to how the company can hope to achieve dramatic growth acceleration for the balance of the year. We remain optimistically cautious pending evidence of successful game launches.
BMO Capital Markets analyst Edward Williams (Market Perform, $4.50 PT)
The performance was driven by better-than-expected bookings from key franchises and higher-than-expected gross margins from the closure of a data center. The company returned to growth a quarter earlier than generally anticipated, posting q/q growth across bookings, adjusted EBITDA, audience metrics, and mobile bookings mix for the first time in two years; we expect sequential growth in each successive quarter throughout the rest of 2014 driven the company's key franchises. We believe FarmVille 2: Country Escape is off to a strong start on mobile with four million installs six days after launch - the title has reached the No. 1 free game in 40 countries and has broken into the top 20 grossing charts on both the iPad and iPhone in the US.Barclays Capital analyst Christopher Merwin (Equal Weight, $5 PT)
The recovery appears to be very much on track for Zynga, as 1Q bookings of $161M and EBITDA of $14M came in ahead of our expectations. Most encouragingly, audience growth across all metrics improved sequentially in the 1Q, as did gross bookings for core titles Words With Friends and Zynga Poker. While discussion about the product pipeline was limited, management did say that they plan to step up spend on marketing for new titles, which may drive slight q/q margin compression in 2Q. We are modestly raising our 2014 bookings estimates and also increasing our price target to $5 from $4.50, in order to reflect our improving outlook for bookings, particularly on mobile.--Written by Chris Ciaccia in New York >Contact by Email. Follow @Chris_Ciaccia
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