NEW YORK (TheStreet) -- China Mobile Games & Entertainment Group (CMGE - Get Report) shares had coverage initiated with a "buy" rating by analysts at Nomura (NMR - Get Report) on Monday. Shares are up 2.3% to $18.93 in early market trading today.
The firm set a price target of $32 on the company's shares, suggesting a 73% increase from the stock's previous closing price.
The positive rating follows the release of the company's first quarter earnings results on Friday in which the company reported a 488.2% increase in quarterly revenue from the previous year.
TheStreet Ratings team rates CHINA MOBILE GAMES -ADR as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate CHINA MOBILE GAMES -ADR (CMGE) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and impressive record of earnings per share growth. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself and weak operating cash flow."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- CMGE's very impressive revenue growth greatly exceeded the industry average of 6.6%. Since the same quarter one year prior, revenues leaped by 405.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
- CMGE's debt-to-equity ratio is very low at 0.01 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 3.71, which clearly demonstrates the ability to cover short-term cash needs.
- Compared to other companies in the Software industry and the overall market, CHINA MOBILE GAMES -ADR's return on equity significantly trails that of both the industry average and the S&P 500.
- Net operating cash flow has significantly decreased to -$8.85 million or 313.97% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- CMGE has underperformed the S&P 500 Index, declining 5.62% from its price level of one year ago. Looking ahead, other than the push or pull of the broad market, we do not see anything in the company's numbers that may help reverse the decline experienced over the past 12 months. Despite the past decline, the stock is still selling for more than most others in its industry.
- You can view the full analysis from the report here: CMGE Ratings Report