In a research report released today, RBC Capital analyst Mark Mahaney maintained a Sector Perform rating on shares of King Digital Entertainment PLC (NYSE:KING) and reduced the price target from $17 to $15, after the company released its second-quarter earnings, in which the company posted Q3 Bookings guidance range of $460-485 million, substantially below Mahaney’s estimates of $512 million. As of this writing, King Digital shares are down 12.50% to $13.30 in mid-day trading.
Mahaney noted, “King reported a beat and lower Q2, with key traffic metrics deteriorating and with a lack of diversification away from its core Candy Crush franchise. Bookings guidance for Q3/Q4 implies material Y/Y declines, though ’15 EBITDA outlook maintained.”
“We’ve stated before that for us to become constructive on the stock, we would need to see stable trends showing bookings growth AND diversification away from CC. This quarter we saw both Gross Bookings declines and a decrease in diversification away from CC… Uh-Oh. This coupled with a weak bookings outlook for the year and weak usage metrics makes us more cautious.”, the analyst added.
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Mark Mahaney has a total average return of 23.1% and a 63.1% success rate. Mahaney has a -26.5% average return when recommending KING, and is ranked #10 out of 3736 analysts.
Out of the 12 analysts polled by TipRanks, 7 rate King Digital Entertainment stock a Hold, while 5 rate the stock a Buy. With a return potential of 18.2%, the stock’s consensus target price stands at $17.97.