Analysts Weigh in on Zynga Inc (ZNGA) Ahead of Q2 Earnings

Zynga Inc (NASDAQ:ZNGA), a developer of mobile video games, is set to announce its second quarter fiscal 2015 earnings results on August 6. On average, analysts predict a loss of ($0.02) per share on revenue of $157.38 million.

Zynga has seen its share value decrease over the last few years due in large part to a disruption in its Facebook Inc (NASDAQ:FB) and web gaming businesses. Rising competition in the market is also viewed as a major obstacle to the company’s future success.

Zynga became popular by creating games for the general audience. Some of its most popular games include FarmVille, which encourages players to tend to all the needs of a farm, and Gems with Friends, which is a turn-based game with the goal of matching three gems to score points. However, while these games were extremely popular when they were released, Zynga has struggled to generate high quality games on a consistent basis to maintain consumer interest.

In order to turn around the free-falling company, Zynga hired a new CEO. However, less than two years later the company has confirmed that the man tasked with turning Zynga around, CEO Don Mattrick, is leaving the company and will be replaced with his predecessor, Zynga founder Mark Pincus. Mattrick, who formerly led the Xbox video game group at Microsoft, said in a statement: “I believe the timing is now right for me to leave as CEO and let Mark lead the company into its next chapter given his passion for the founding vision and his ability to couple our mobile progress with Zynga’s unique strengths.”

Arvind Bhatia of Sterne Agee last rated Zynga on May 14 and maintained a Neutral rating on the stock. Bhatia noted that Zynga’s success with its recently launched title, Empires and Allies, could be a catalyst to further success for the company. The analyst added, “Zynga has promised to launch 6 to 8 new titles this year and potential success with Empires and Allies could help investors feel comfortable with the upcoming titles.” Furthermore, Bhatia pointed out that investors will be carefully eyeing the launch of the next title launch, Dawn of Titans, in the coming months to help determine future company profits.

Arvind Bhatia has rated Zynga a total of 12 times since 2010, earning an 100% success rate recommending the stock and a +71.6% average return per Zynga recommendation when measured over a one-year horizon and no benchmark. Overall, he has a 66% success rate recommending stocks and a +26.1% average return per recommendation.

Michael Pachter of Wedbush last rated Zynga on July 28, reiterating an Outperform rating with a price target of $6. Back in May, Pachter responded to Don Mattrick replacing Mark Pincus as company CEO by stating that “Mr. Mattrick put a solid structure in place that will allow Zynga to succeed, but […] that the change in leadership, focus, and perhaps sense of urgency brought on by Mr. Pincus may end up accelerating Zynga’s return to profitability.” Pachter also applauded the decision to cut costs at the company, which “show[s] us that Mr. Pincus is not taking his responsibility lightly.” However, since then Mattrick has left his position and has been replaced by his predecessor, Pincus.

Michael Pachter has rated Zynga a total of 23 times since 2009, earning a 20% success rate recommending the stock and a -14.8% average loss per recommendation when measured over a one-year horizon and no benchmark. He also has a 49% overall success rate recommending stock and a -0.7% average return per recommendation.

Out of 7 analysts polled by TipRanks, 2 analysts are Bullish on Zynga, 4 are neutral, and 1 is bearish. The average 12-month price target for Zynga is $3.53, marking a 42.34% potential upside from where the stock is currently trading. On average, the all-analyst consensus for Zynga is Hold.

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