Roth Capital’s Tech Insights: Glu Mobile, Inc. (GLUU) And NVDIA Corporation (NVDA)

Roth Capital Partners’ analysts see Canadian IOS beta rankings as a good indicator of a game’s success for Glu Mobile, Inc. (NASDAQ:GLUU) and are keeping gaming and automotive growth in focus as NVDIA Corporation (NASDAQ:NVDA) is set to report earnings next Wednesday. Here’s a closer look.

Glu Mobile, Inc.

Darren Aftahi of Roth Capital Partners believes that Canadian IOS Beta tests in the Canadian App store show a strong correlation between grossing rank and worldwide release performance. Further, he claims that Glu games in beta, ranking in the top 50 (or better) vs.100 (or below) can generate approx. “4-5x as much revenue over the first six months.” Aftahi is optimistic as Glu is set to release Kendall & Kylie (K&K), a celebrity app store game with a beta rank of approx .40, later this week.

Aftahi remarks however, that investors are skeptical about Glu’s track record with celebrity video games as Katy Perry Pop had a “disappointing performance,” and never made it to Canadian beta. Emphasizing caution, Aftahi believes that the data from Canadian beta testing of K&K “should translate into better performance than Katy Perry Pop” and contribute to earnings 1H16. He believes K&K could be a “major catalyst” if the stock performs well.

Aftahi does not include K&K’s projected success in 1Q16 non GAAP revenue estimates of $47.3 million and Glu’s guidance of $47 million at the half of 2016. This leaves room for upside if the game performs well upon a global release.

Analyst Aftahi is bullish on Glu and rates the stock a Buy with a price target of $4.00.

According to TipRanks which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Darren Aftahi has a yearly average loss of 4.1% and a 49% success rate. Aftahi is ranked #2853 out of 3671 analysts.

NVIDIA Corporation

Roth Capital Partners analyst, Brian Alger, expects to see earnings results next Wednesday in line with the midpoint guidance given in early November ($1,274-1,326 million). Out of 27 analysts, only 5 are predicting a beat and no analysts have cut estimates. NVIDIA’s stock performance since the end of December “reflects uncertainty about a number of NVDA’s end markets,” says Alger. The analyst has modeled a 4% Q/Q decline versus the street’s more conservative 6% decline due to the April quarter being “typically soft.” He sees less of an impact coming from PC OEM’s and continued resilience in the gaming sector leading to strong CQ:14 release of titles.

Alger writes that he is unsure whether gaming can continue to grow in light of slower consumer spending in China and Europe. In addition, there could be negative effects on NVIDIA’s stock relating to the Volkswagen TDI engine scandal, making NVIDIA Corp’s stock performance hard to predict. In the future, the analyst expects to see gaming, data center, and automotive as “providing the strongest growth” for the company. Alger continues, “With the PC OEM business now accounting for only ~10% of sales, we see muted impact from PC sales volatility going forward.”

Alger rates NVDA Neutral and reiterates a price target of $30.

According to TipRanks which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Brian Alger has a yearly average loss of 15% and a 36% success rate. Alger is ranked #3315 out of 3671 analysts.

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