Analyst Michael Patcher said in a note to investors that "we see multiple potential positive catalysts in 2019 and 2020" for the San Francisco-based company.
Glu Mobile publishes titles primarily in four genres, including home decor, sports and action, fashion and celebrity, and time management.
Patcher noted that shares closed at $7.05 on Thursday, a roughly 37% drop from the closing price of $11.22 on May 6 prior to Glu Mobile reporting its first-quarter results.
"The selloff over the last month seems unwarranted, and we think it is primarily attributable to a sequential decline in Glu's flagship Design Home bookings," Patcher said. "The share price decline may have been accentuated by Tencent Holdings liquidating a portion of its sizable stake earlier this week, seemingly lowering the potential for an outright acquisition of Glu Mobile."
Patcher added that he believes the launch of Walt Disney "Sorcerer's Arena" in August may improve investor sentiment given the popularity of the Disney franchise and the track record of its developers, which created Electronic Arts' "Star Wars: Galaxy of Heroes."
"We believe that to be EA's biggest title ever, with bookings of well over $200 million for multiple years," Patcher said. "Finally, although the launch of "WWE: Universe" has been underwhelming so far, we expect the company to improve the game's performance through its live operations expertise."
Patcher said Glu Mobile has three additional titles in development that will potentially launch in 2020. One of the titles is being developed by Glu Mobile's Toronto studio, the team that created "Kim Kardashian: Hollywood." Another is the next generation of Glu's "Deer Hunter" franchise, while the third title is a new lifestyle game from Crowdstar.
"All of the anticipated 2020 titles will be original IP and are expected to carry more attractive margins than royalty-bearing IP," Patcher wrote.