Zynga (ZNGA) Stock Initiated at Oppenheimer
NEW YORK (TheStreet) -- Zynga (ZNGA) - Get Report stock is rising 0.39% to $2.55 in pre-market trading on Thursday after it was initiated with a "perform" rating at Oppenheimer.
The firm did not set a price target, but estimated a loss of 2 cents per share on $174.8 million in revenue for the 2015 fourth quarter.
The online social gaming provider has seen its daily average users decline in the past 11 quarters despite the popularity of older games, Oppenheimer said in an analysts note.
"With near-term results likely to be sluggish until some recently delayed game titles are released and start to drive growth, we don't expect the stock to outperform," analysts added.
Zynga's financial strength could give the company a chance to launch on other platforms, create its own platform or make strategic acquisitions.
The San Francisco-based company ended the third quarter with more than $1 billion in cash and no debt, analysts noted.
Separately, TheStreet Ratings team rates ZYNGA INC as a Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:
We rate ZYNGA INC (ZNGA) 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 revenue growth, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. However, as a counter to these strengths, we find that we feel that the company's cash flow from its operations has been weak overall.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 17.3%. Since the same quarter one year prior, revenues rose by 10.8%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- ZNGA has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 5.29, which clearly demonstrates the ability to cover short-term cash needs.
- ZYNGA INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, ZYNGA INC reported poor results of -$0.25 versus -$0.05 in the prior year. This year, the market expects an improvement in earnings (-$0.02 versus -$0.25).
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Software industry and the overall market, ZYNGA INC'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 -$5.11 million or 111.58% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- You can view the full analysis from the report here: ZNGA
Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.