NEW YORK (TheStreet) -- Glu Mobile (GLUU) stock closed up 3.4% to $6.69 today after analysts at Canaccord Genuity increased their price target on shares to $9 from $8. The firm maintained its "buy" rating.
Analysts said the main reason for their increase was due to reality TV star Kim Kardashian's successful partnership with the company.
"GLUU's analyst day kicked off with the star of its highest grossing game, Kim Kardashian," Canaccord Genuity analysts said. "The resounding message throughout the day was management's view that 20%+ annual top-line growth is not only achievable over the next five years but may even prove conservative."
At the end of April, the company reported that Britney Spears is following in Kim Kardashian's footsteps--inking a five-year deal. Similar to Kim's game, Britney's app will feature her voice, likeness and "creative influence," according to Glu.
"I am thrilled to add Grammy Award-winning legend Britney Spears to Glu's growing list of partners as we continue to expand our celebrity gaming platform," Glu Chairman and CEO Niccolo de Masi stated.
Additionally, the company reported strong first quarter earnings at the end of April. Glu Mobile reported revenue of $62.44 million for the first quarter, up 33% compared to $47 million in the first quarter last year. However, earnings for the first quarter were 2 cents per share, compared to 6 cents per share over a year ago period.
Glu Mobile, headquartered in San Francisco, is a global developer and publisher of mobile games for smartphone and tablet devices.
TheStreet Ratings team rates GLU MOBILE INC as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:
"We rate GLU MOBILE INC (GLUU) 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 compelling growth in net income. However, as a counter to these strengths, we find that the company's return on equity has been disappointing."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- GLUU's very impressive revenue growth greatly exceeded the industry average of 1.4%. Since the same quarter one year prior, revenues leaped by 55.8%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- GLUU 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 the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.33, which illustrates the ability to avoid short-term cash problems.
- The gross profit margin for GLU MOBILE INC is rather high; currently it is at 63.14%. Regardless of GLUU's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, GLUU's net profit margin of 1.61% is significantly lower than the industry average.
- This stock has managed to rise its share value by 69.19% over the past twelve months. Looking ahead, however, we cannot assume that the stock's past performance is going to drive future results. Quite to the contrary, its sharp appreciation over the last year is one of the factors that should prompt investors to seek better opportunities elsewhere.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. When compared to other companies in the Software industry and the overall market, GLU MOBILE INC's return on equity is below that of both the industry average and the S&P 500.
- You can view the full analysis from the report here: GLUU Ratings Report