In a research report released Friday, Roth Capital analyst Darren Aftahi initiated coverage on shares of Glu Mobile Inc. (NASDAQ:GLUU), with a Buy rating and a $5 price target, which implies an upside of 59% from current levels.
Aftahi backed his bullish outlook by noting, “We believe there is significant opportunity in the celebrity gaming platform, and even more so now that GLUU’s ~$125M investment from Tencent (TCHEY-NC) opens the door to a massive new audience. In our view, GLUU has only launched one celebrity based game, Kim Kardashian: Hollywood, which proved that engaged celebrities on social media, paired with the right gaming engine, can create a meaningful, long-tailed revenue stream that is differentiated.”
The analyst continued, “Following its disappointing 4Q guide, the stock has been left for dead in our view, but creates opportunity. This is not the first time this has happened with GLUU, as we point to recent periods such as September 2013 (prior to the launch of DH14), June 2014 (prior to the launch of Kim Kardashian: Hollywood) and early 2015 (prior to the Tencent investment announcement), which made for high return, attractive long entry points.”
Bottom line: “GLUU, at current levels, provides an attractive entry point in light of: 1) the impending launch of Katy Perry Pop, 2) additional celebrity portfolio launches, 3) ’16 distribution of Tencent’s WeFire outside of Asia-Pac, and 4) a high degree of visibility into ‘16 game pipeline.”
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Darren Aftahi has a total average return of -3.2% and a 48% success rate. Aftahi is ranked #3233 out of 3842 analysts.
Out of the 8 analysts polled by TipRanks, 5 rate Glu Mobile stock a Buy, while 3 rate the stock a Hold. With a return potential of 118.5%, the stock’s consensus target price stands at $6.88.