Zynga Playing the Field, Retains Room to Ramp

Video games have been in the headlines recently, as China has declared a maximum limit of hours per week spent playing them for its younger citizens. While three hours per week on video games was shocking to some, Zynga, Inc. (ZNGA) did not feel the shock. The U.S. game and social network developer has been pushing ahead with mergers and acquisitions, and its strong pipeline has analysts remaining bullish. (See Zynga stock charts on TipRanks)  

Reporting his confident hypothesis is Brian Fitzgerald of Wells Fargo, who wrote that Zynga’s “mobile ecosystem is vast,” and that he expects a healthy and swift recovery in user acquisition in the long-term.  

Fitzgerald rated the stock a Buy, and provided a price target of $13. This target represents a potential 12-month upside of 47.23%.  

The five-star analyst explained that Zynga’s recently acquired game monetization platform, Chartboost, has the potential to help scale in-app purchases and monetize current users. He added that the company could drive Zynga to compete with larger AdTech firms in the coming years.  

ZNGA has been investing in user acquisition, but still has room to ramp up spending. Its two “critical mass titles” Merge Magic! And Merge Dragons! still have room to grow and competition to overcome. Meanwhile, many new games are receiving funding from the company.  

When acquiring smaller firms, the video game developer traditionally has allowed them to maintain creative freedom in designing games. Fitzgerald attributes Zynga’s edge over competing companies to this environment of independence it provides.  

On TipRanks, ZNGA has an analyst rating consensus of Strong Buy, based on 12 Buy ratings. The average Zynga price target is $12.02, suggesting a possible 12-month upside of 36.13%. ZNGA closed trading Wednesday at a price of $8.83 per share.  

Disclosure: At the time of publication, Brock Ladenheim did not have a position in any of the securities mentioned in this article 

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